Rounding to the nearest $.05 increment has become a necessary practice for some businesses due to the low supply of pennies in circulation. This summer, Vermont businesses have been provided guidance on how they can apply nickel rounding to cash sales. Visit the Vermont Department of Taxes website for the guidance here: https://tax.vermont.gov/news/guidance-retailers-and-consumers-phase-out-penny-cash
While rounding to the nickel is authorized in cash sales, businesses are not required to adopt it. Businesses can choose to continue to make exact change, and utilize pennies in cash transactions.
Applying the model may present as confusing at first, because rather than rounding to the nearest whole number and in increments of 10 (familiar arithmetic), to apply nickel rounding, we use decimal figures, specifically five cent increments.
Example Table of Nickel Rounding
| Cents in a Final Sale Amount in CASH Sale | Rounding to the Nearest Nickel Action | Figure to Round to: | Example if Final Cash Sale Amount is $12.80 plus the Cents (noted in the first column) |
| $.01 | Round down | $.00 | $12.80 |
| $.02 | Round down | $.00 | $12.80 |
| $.03 | Round up | $.05 | $12.85 |
| $.04 | Round up | $.05 | $12.85 |
| $.05 | No rounding | $.05 | $12.85 |
| $.06 | Round down | $.05 | $12.85 |
| $.07 | Round down | $.05 | $12.85 |
| $.08 | Round up | $.10 | $12.90 |
| $.09 | Round up | $.10 | $12.90 |
| $.10 | No rounding | $.10 | $12.90 |
| $.11 | Round down | $.10 | $12.90 |
| $.12 | Round down | $.10 | $12.90 |
| $.13 | Round up | $.15 | $12.95 |
| $.14 | Round up | $.15 | $12.95 |
| $.15 | No rounding | $.15 | $12.95 |
| $.16 | Round down | $.15 | $12.95 |
| $.17 | Round down | $.15 | $12.95 |
| $.18 | Round up | $.20 | $13.00 |
| $.9 | Round up | $.20 | $13.00 |
| $.20 | No rounding | $.20 | $13.00 |
| $.21 | Round down | $.20 | $13.00 |
*Nickel rounding only applies to cash purchases over $.05.
Businesses that opt-in to nickel rounding must post the required model notice in a clear and conspicuous manner at the point of sale or the entrance to the business.
Nickel Rounding should only be applied to:
- Final Sale Amount (after all fees and taxes have been applied)
- Cash sales
What happens to electronic payments like credit card, debit card, gift card, tap-to-pay?
- Business as usual; nickel rounding should not be applied.
Businesses must consider how applying nickel rounding will impact their POS systems and cash drawer reconciliation.
To implement nickel rounding while using a POS system, there are important tasks the POS will need to be able to accomplish:
- Calculate the transaction and applicable taxes normally.
- Determine whether the customer is paying with cash.
- Apply the appropriate five-cent rounding only to the final cash amount.
- Record the rounding adjustment separately so that the sales and cash reports reconcile.
With some exploration, system updates and training, making change without pennies is possible.
