Congress·In Committee·H.R. 7230

Congress Proposes New Tax Credits to Boost Use of American-Grown Cotton in Clothing and Textiles

Buying American Cotton Act of 2026

about 2 months ago·View on Congress.gov

Part of: Congress Proposes Tax Credits to Revitalize Domestic Cotton Manufacturing

Legislative Progress

House

Senate

President

Law

Key Points

This bill creates a new tax credit for companies that sell products made with cotton grown in the United States. To qualify for the money, businesses must use a digital tracking system to prove the cotton came from an American farm and follow it through every step of the manufacturing process.
The amount of the tax break depends on where the cotton is turned into fabric or clothing. Companies get a 24% credit if the work is done in the U.S. or with friendly trade partners, but the credit drops to 18% if the processing happens in countries that do not have a free trade agreement with the U.S.
To help American factories, the bill offers even bigger tax breaks for making yarn and fabric at home. The credit is 1.6 times higher for yarn made in the U.S. and 6.5 times higher for fabric produced in American textile mills.
The goal of this policy is to encourage companies to buy American-grown cotton and keep more of the manufacturing process in the U.S. or with close allies. It also aims to make supply chains more transparent so the government can verify exactly where products are made.

TaxesAgricultureLabor Employment

Impact Analysis

Personal Impact

Who is affectedScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Broader Impacts

DomainScoreShort-termLong-termReversibilityConfidence

Score

Scores: -5 (harmful) to +5 (beneficial)Short-term: 0-2 yearsLong-term: 10-30 years

State Impacts

StateScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions

Jan 22, 2026House

Referred to the House Committee on Ways and Means.

Jan 22, 2026

Introduced in House

What Happens Next

Projected impacts based on AI analysis

12-24 months after enactment

IRS and USDA issue regulations for digital tracing and cotton certification

Businesses will learn the specific rules for tracking cotton through the supply chain and certifying their products qualify for the credit. Until these rules are finalized, claiming the credit may be difficult.

Related News

3 articles

Carolina Journal·about 2 months ago

Murphy introduces legislation to boost American cotton

Rep. Greg Murphy (R-NC) introduced the Buying American Cotton Act to create a tax credit for products made with U.S. cotton. The bill aims to support rural farming communities in Eastern North Carolina facing global competition and economic pressure.

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Agri-Pulse·about 1 month ago

Buy American struggles to gain traction in Trump's Washington

The Buying American Cotton Act would offer tax credits to apparel manufacturers using U.S. cotton. The credit value ranges from 15 cents to $1.33 per pound depending on processing location, with higher incentives for domestic plants compared to those in non-FTA countries.

Fibre2Fashion·about 2 months ago

US Congressman introduce Buying American Cotton Act

Reps. Greg Murphy and Terri Sewell introduced bipartisan legislation proposing a tax credit for the first U.S. entity selling cotton products to consumers. Eligibility requires digital tracing and proof of U.S. origin to boost domestic demand and manufacturing.