Buying American Cotton Act of 2026

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.