House Passes Bill Allowing Cash Purchases to Be Rounded to the Nearest Nickel

The Alabama House on Thursday passed HB545, a bill that would allow in-person cash transactions to be rounded to the nearest five cents.

Rep. Norman Crow, R-Tuscaloosa, is carrying the bill. House members approved an amended version March 19 after first taking up a substitute from the House Financial Services Committee. An amendment added on the House floor says the rounding rules would not apply when someone makes a payment to a governmental entity, including state and local agencies and related public bodies in Alabama.

If HB545 becomes law, the change would take effect immediately. The bill would direct the Alabama Department of Revenue to post notice on its website that cash rounding is authorized.

How the Bill Would Work

The proposal applies only to in-person cash transactions. It would allow the final amount paid in cash, or the cash change returned to a customer, to be adjusted so the total lands on the nearest five-cent increment.

The bill sets out a specific rounding method based on the last digit in the amount. Amounts ending in 1 or 2 would round down to 0. Amounts ending in 3 or 4 would round up to 5. Amounts ending in 6 or 7 would round down to 5. Amounts ending in 8 or 9 would round up to 0. Totals already ending in 0 or 5 would stay the same.

In practical terms, a cash total of $10.21 would be rounded to $10.20, while a total of $10.24 would be rounded to $10.25. A total of $10.38 would become $10.40, and a total of $10.46 would become $10.45.

The bill also covers transactions where a customer uses more than one payment method. If part of a purchase is paid in cash and part by another method, only the cash portion could be rounded. The non-cash portion would remain unchanged.

What the Bill Would Not Change

HB545 is written to separate rounding from the underlying price of a purchase. The listed sale price would not change under the bill. Sales tax also would not change, and neither would any surcharge or fee tied to the transaction.

That distinction is one of the central features of the proposal. The bill does not authorize a merchant to change the price on an item or to adjust tax calculations. It only allows the final cash exchange to be brought to the nearest nickel.

Card payments, mobile payments, checks, and other non-cash transactions would not be affected. A person paying without cash would still pay the exact amount due under current practice.

For businesses, the proposal would create a separate rule for handling cash at the register while leaving their pricing and tax collection systems in place. For customers, the main effect would be that the amount paid in cash, or the coins received back, could shift by a few cents in either direction.

The Government Payment Exemption

The House added a notable exception before final passage. Under the amendment, the cash-rounding authorization would not apply to any transaction in which payment is made to a governmental entity.

The bill defines governmental entity broadly to include any state or local agency or instrumentality located in Alabama. That would put public offices outside the rounding system even if they accept in-person cash payments.

Under that language, people making cash payments to public entities would continue to pay the exact amount due rather than a rounded amount. The source material provided with the bill does not list examples, but the wording covers state and local government bodies and related public instrumentalities.

The addition narrows the bill from a statewide rule for all in-person cash transactions to one that would apply in the private sector while leaving government collections under existing practice.

Why the Proposal Focuses on Nickels

The bill is limited to five-cent increments, which means the practical issue behind it is the handling of pennies in face-to-face cash transactions. Rather than requiring the final exchange to account for every cent, the proposal would let the transaction settle on amounts that can be paid or returned using nickels and larger coins.

Nothing in HB545 eliminates pennies as legal tender, and nothing in the bill requires a business or customer to stop using exact pricing. The measure simply authorizes a different way to complete the cash portion of a sale.

That distinction matters because the bill does not rewrite how goods are priced in Alabama. A retailer could still mark an item at a price ending in .99 or any other amount. Tax would still be calculated the same way. The only change would come at the point when cash changes hands.

By drafting the bill around the transaction total rather than the posted price, lawmakers are treating rounding as a payment-processing rule rather than a pricing rule.

Effects on Customers and Businesses

For customers who pay in cash, the effect would be modest but immediate. On some purchases, they would pay a cent or two less than the exact total. On others, they would pay a cent or two more. The same is true when a cashier makes change. A customer could receive a slightly adjusted amount so the final exchange lands on a nickel.

Over time, the bill assumes those small differences would balance out through ordinary rounding. The method set out in the legislation rounds both upward and downward depending on the last digit, rather than always favoring the seller or the buyer.

Businesses that handle cash would have to apply the rounding formula when taking cash payments or returning cash change. The proposal does not create a separate rule for different types of businesses. A merchant using the authorization would still have to keep sale prices, tax amounts, and other charges intact on the underlying transaction.

Mixed-payment transactions are likely where the mechanics matter most. If a customer owes an amount that does not land on a nickel and pays part with a card and the rest with cash, the rounding can be applied only to what is actually paid in cash. That keeps the bill from altering amounts processed through electronic payment systems.

Non-cash customers would see no change at all. The legislation expressly leaves those payments outside the rounding system.

Role of the Department of Revenue

The Alabama Department of Revenue would have a limited but specific role under HB545. The bill requires the department to post notice on its website that cash rounding is authorized.

The agency is not given broader authority in the source material to set a different formula or to change the bill’s terms. Its task is to provide public notice that the state allows the practice.

That notice requirement fits with the structure of the bill. HB545 creates a statewide authorization for a payment practice, then assigns the state tax agency a communication role so businesses and consumers can see that the practice is permitted.

Because the bill says it would take effect immediately, the posting requirement would matter as soon as the legislation became law. Businesses handling cash would be able to look for the department’s notice as confirmation that the authorization is in place.

Legislative Path in the House

HB545 moved through the House over a little more than two weeks. The bill was read for the first time and referred to the House Financial Services Committee on March 3.

The committee reported the bill out on March 10, and it was placed on the House calendar after its second reading that same day. On March 19, the House took up the bill on third reading.

Before final passage, members considered an engrossed substitute from the Financial Services Committee. The House adopted that substitute on Roll Call 1018, then passed the bill as amended on Roll Call 1019.

That sequence matters because the House did not simply pass the bill in its original form. The version that now leaves the chamber includes committee changes as well as the floor amendment exempting payments to governmental entities.

What the Bill Means in Practice

HB545 would create a clear statewide rule for cash rounding rather than leaving the issue to informal store-by-store practices. Businesses would have one method to follow, and customers would have one set of expectations when paying with cash.

The bill’s design suggests lawmakers are trying to keep the adjustment small and easy to apply. A five-cent standard is familiar to consumers, and the digit-based rules are straightforward enough to use at a checkout counter.

At the same time, the proposal is narrow. It does not address online transactions, mail payments, or other settings where a purchase is not made in person. It does not apply to non-cash transactions. It also now excludes payments made to government entities.

That narrow drafting leaves the bill focused on a single point in the payment process: the final exchange of cash in a face-to-face transaction. Most of the rest of the transaction, including price-setting and tax collection, would stay exactly as it is now.

For public agencies, the amendment means continuity rather than change. State and local entities that accept cash would remain outside the rounding system and would continue collecting exact amounts due.

What Comes Next

After passing the House, HB545 now moves to the Senate for consideration. Senators can approve the bill as it arrived from the House, change it, or decline to advance it.

If the Senate passes the same version, the bill would go to the governor. If senators make changes, the House would need to agree to those revisions before the proposal could be sent on.

For now, the House vote puts Alabama lawmakers on record in favor of allowing rounded cash payments in private in-person transactions while drawing a line around payments made to government. The next stage will determine whether that approach gains support in the Senate and reaches the governor’s desk this session.