The Massachusetts Department of Revenue (DOR) and Division of Standards (DOS) today issued guidance to help businesses navigate cash transactions following the federal government’s decision to discontinue the penny.

While the U.S. Treasury stopped minting pennies on November 12, 2025, pennies remain legal currency and can be used in cash transactions at all retailers. The new guidance issued by DOR clarifies how businesses should calculate sales tax and manage cash payments as pennies become less available.

Businesses may choose to round cash transactions to the nearest five cents to make change. The guidance outlines how to do so while remaining in compliance with Massachusetts law.

Key points for businesses

• Sales tax must be calculated on the exact purchase price
• Sales tax must be calculated before any rounding is applied
• Rounding applies only to the final cash total, not individual item prices
• Displayed item prices must match the price charged at checkout.

DOR’s guidance makes clear that rounding a cash payment does not change the amount of sales tax owed. Businesses must calculate and collect sales tax based on the exact purchase price, even if the final cash total is rounded up or down.

“We know the rounding required by the discontinuation of the penny has created questions about how to calculate and collect sales tax,” said Commissioner of Revenue Geoffrey Snyder. “Our hope is that this guidance provides the clarity businesses need to ensure they remain compliant with the laws.”

“The Division of Standards received several questions about how this federal policy will impact Massachusetts businesses,” said Commissioner of Standards Dave Rodrigues. “We developed this guidance to provide clarity on how state law applies, with a focus on both our business community and consumer protection.”

DOS guidance also clarifies that rounding is permitted under state law as long as it is applied to the total transaction, not individual items. Existing law still requires that the price displayed for each item matches the price charged at checkout.

To protect consumers, DOS recommends that any business choosing to round cash transactions clearly post its policy at entrances and points of sale, including in multiple languages where appropriate.

Before completing a transaction that includes rounding, businesses should also offer customers the option to pay using another method, such as a card or exact change.

This guidance is part of the Healey-Driscoll Administration’s efforts to provide clear, practical information to businesses and protect consumers across Massachusetts.