According to the United States Secret Service, a torn or damaged dollar bill must retain more than half of its face value in order to be regarded lawful cash. When a bill is torn, mangled, or otherwise damaged, it must be redeemed at a bank.
If a bill is of uncertain value or a bank refuses to accept it in exchange for an undamaged bill of equivalent value, it should be sent to the United States Bureau of Engraving and Printing for redemption. The Bureau of Engraving and Printing states that if less than half of a damaged bill remains or if the bill is severely damaged, professionals decide whether the money is redeemable. If the bill is determined to be valid despite the damage, the Bureau of Engraving and Printing issues a check to the Treasury in the amount of the damaged currency.
