Penny Rounding

Penny Rounding Legislation

Below is an email received concerning penny rounding

Dear local leaders,

The Department of Revenue (DOR) is issuing this letter to provide information regarding recently passed legislation (HB 2819 that goes into effect August 28,2026) that allows vendors to round purchase totals on cash transactions.

The purpose of this legislation is to simplify low-denomination cash handling, reduce reliance on pennies, and ensure proper sales tax collection and remittance. Local jurisdictions should see no change in reported or remitted tax amounts because of this legislation. No local ordinance changes are required. Key Provisions of HB 2819

•      Optional rounding for CASH transactions only. Rounding is only applied to the final total of a purchase after all items, discounts, and taxes are calculated. Rounding is permissible to the nearest cent total divisible by 5:

•      Round Down: Cent totals ending in 1, 2, 6, or 7

•      Round Up: Cent totals ending in 3, 4, 8, 9 Examples:

•      A $1.92 total rounds down to $1.90

•      A $1.93 total rounds up to $1.95

•      No rounding permitted for non-cash payments. Purchases made by credit card, debit card, online (mobile) payments, checks or other non-cash methods must reflect the exact calculated total.

•       Protection for vendors acting in good faith. Vendors who follow the rounding rule properly are not considered in violation of any state or local regulation or standard. This provision is designed to provide clarity and protect retailers from conflicting interpretations.

•       No change to how sales tax is reported or remitted. The legislation does not alter tax rates, reporting requirements, or remittance obligations. It only allows rounding of the final amount charged in cash transactions; the underlying tax calculations remain the same. The required tax must still be remitted according to tax brackets regardless of payment method.

•       Existing proportional distribution of underpaid local taxes remains unchanged. If a taxpayer under-remits sales tax, DOR will continue to prorate the received amount among affected jurisdictions based on their respective shares. This long-standing process remains intact.

Impact on Localities

The bill permits retailers to round cash totals to reduce coin usage. Local jurisdictions should see no change in reported or remitted tax amounts because of this legislation.

Action Items for Local Governments

You may wish to share this information with local businesses to reduce confusion during implementation.

If your locality has questions or would like additional clarification, please feel free to reach out. We are happy to assist in ensuring a smooth understanding of the new law.

Sincerely,

Missouri Department of Revenue