Buying American Cotton Act of 2026
Congress Proposes New Tax Credits to Boost Use of American-Grown Cotton in Clothing and Textiles
Legislative Progress
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.
Impact Analysis
Personal Impact
If the tax credit successfully incentivizes more domestic textile manufacturing — particularly yarn spinning and fabric weaving — it could support jobs in unionized textile and manufacturing facilities. The dramatically higher credit multiplier for U.S.-made fabric (6.5x) is specifically designed to encourage keeping production in American factories, which could protect or create union jobs in an industry that has seen decades of offshoring.
Broader Impacts
State Impacts
Milestones
Referred to the House Committee on Ways and Means.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
Related News
3 articlesMurphy 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.
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.
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.
Source Information
Document Type
Congressional Bill
Official Title
Buying American Cotton Act of 2026
Data Sources
Sponsor
Cosponsors
(46)Analysis generated by AI. Always verify with official sources.