Maryland Enacts ‘Penny Rounding’ Law Amid Coin Shortage — What Consumers Need To Know

ANNAPOLIS, Md. — A new Maryland law allowing retailers to round cash transactions to the nearest nickel took effect immediately last week following its signing by Gov. Wes Moore as an emergency measure.

The legislation, backed by the Maryland Retailers Alliance, is designed to address a growing shortage of pennies that has made it increasingly difficult for businesses to provide exact change in cash transactions.

According to a May 2026 tax alert issued by the Maryland Comptroller’s Office, the cessation of penny production “has created a penny shortage, making providing change for cash transactions difficult in some cases.”

How The Rounding Works

Under the law, retailers conducting cash transactions may round either the final price or the change due — but not both — to the nearest 5 cents when exact change is unavailable.

If a total ends in 1, 2, 6 or 7 cents, the amount is rounded down. Totals ending in 3, 4, 8 or 9 cents are rounded up.

The policy applies only to cash payments and does not affect credit, debit or digital transactions. It also does not apply when customers provide exact change.

Tax Calculations Unchanged

Officials stressed that the rounding law does not impact how sales tax is calculated. Taxes must still be applied to the original, unrounded price.

“The rounding law does not change the taxable price of a product or service,” the Comptroller’s Office noted, adding that sales tax must be calculated before any rounding occurs.

Optional For Businesses

Participation in the rounding practice is optional. Businesses that still have sufficient pennies may continue to provide exact change, and the law does not require rounding in any transaction.

The measure took effect May 12 after being passed by the Maryland General Assembly as companion bills — House Bill 1026 and Senate Bill 893 — and signed into law the same day.

A Shift In Everyday Transactions

Supporters say the change brings Maryland in line with a growing number of jurisdictions adopting similar policies in response to coin shortages, while some consumer advocates have raised concerns about potential confusion at checkout.

State officials and retail advocates encourage businesses to clearly communicate rounding policies to customers at the point of sale to ensure transparency.

What Shoppers Should Know

• Applies only to cash payments: The rounding rule does not apply to credit, debit or digital transactions.
• Exact change still accepted: If you pay with exact change, no rounding will occur.
• Rounding follows a set formula:
  • Totals ending in 1, 2, 6 or 7 cents are rounded down.
  • Totals ending in 3, 4, 8 or 9 cents are rounded up.
• Only one adjustment allowed: Retailers may round either the final price or the change — not both.
• Businesses don’t have to round: Retailers can still give exact change if they have enough pennies.
• Sales tax stays the same: Taxes are calculated on the original price before rounding, so you’re not being taxed more.
• Applies to most in-person purchases: The law covers everyday cash transactions for goods and services.

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