A new Washington state law offers a way to make change in an era without pennies.

The federal government stopped making pennies last year but intends to keep the roughly 114 billion pennies in existence in circulation for as long as possible.

Plenty of retailers aren’t stocking pennies in their tills already. It’s forced states to come up with a solution that offers clear guidelines for merchants and predictability for consumers.

House Bill 2334, signed by Gov. Bob Ferguson on March 23, is Washington’s approach.

It allows but does not require retailers to round cash purchases up or down to the nearest 5 cents when they make change. Payments with credit or debit cards are not affected.

That means if the total price, including taxes, ends in 1 cent, 2 cents, 6 cents, or 7 cents, the amount is rounded down to the nearest multiple of five. If it ends in 3, 4, 8 or 9 cents, the bill will be rounded up.

For example, if a purchase is $4.97 and a customer hands over $5, the cashier would round down to $4.95 and provide a nickel in change. If the amount is $4.98, the cashier would round up and no change would be paid out.

Rep. April Berg, D-Mill Creek, said she authored the legislation to address “the myriad of issues that consumers will face with the elimination of the currency. The sense of urgency increased around this issue as more and more retailers ran out of pennies to make change for customers.”

Retailers who already started rounding wanted a law to legitimize the process and to make clear how they reconcile the practice with tax reporting requirements. The law spells out that taxes and fees owed by a business are based on the purchase price prior to rounding. 

Another key for businesses is clear language that if the purchase amount after rounding is different than a displayed or advertised price, it does not violate the Consumer Protection Act. 

The state Department of Revenue estimates up to 400,000 taxpayers with retail sales will be affected. It will need to issue guidance and update relevant information on its website, work the agency says it can cover within its existing budget.

The legislation was passed on final votes of 80-15 in the House and 45-2 in the Senate. It will take effect in mid-June.

Washington isn’t alone in adopting rounding as a method to solve the penny problem. Arizona’s law took effect last week. Florida, Tennessee, Virginia and New York are among the other states taking this path.

The Oregon Legislature passed a rounding law earlier this month. It has an emergency clause and will take effect immediately if signed by Gov. Tina Kotek.

This story is republished from the Washington State Standard, a nonprofit, nonpartisan news outlet that provides original reporting, analysis and commentary on Washington state government and politics.