Buying American Cotton Act of 2026
- Bill Number
- H.R. 7230
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-01-22: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-11T08:06:59Z
AI-Generated Summary
Purpose
This legislation amends the Internal Revenue Code of 1986 to create a tax credit aimed at encouraging the use of cotton grown in the United States and products made from it. It also seeks to track the processing of such cotton through a digital supply chain system.
Key Provisions
- Credit Amount and Eligibility: The credit equals the volume of qualified U.S.-grown cotton in an eligible product sold in a qualifying sale, multiplied by an applicable percentage (24% or 18%) and the average market price of cotton over the prior three years.
- Qualifying Sale: Applies to the first sale of a finished product to an unrelated buyer, generally within the U.S. or tied to U.S. business income.
- Qualified Cotton Requirements: Must be extra long staple or upland cotton grown in the U.S., verified by a permanent bale identification number or equivalent proof, and tracked digitally through the entire supply chain to the final product.
- Processing Rules: The 24% rate applies if cotton is processed only in the U.S. or in countries with free trade agreements or certain unilateral preference programs; the 18% rate applies otherwise. Processing excludes mere storage or packaging.
- Enhanced Credits: Taxpayers may elect multipliers of 1.6 times for qualified cotton yarn or 6.5 times for qualified cotton fabric made in the U.S.
- Administration: The Secretary of the Treasury, in consultation with the Secretary of Agriculture, issues regulations for tracing, certification, and preventing duplicate claims. The credit is part of the general business credit and may be transferred.
- Effective Date: Applies to eligible products sold after the date of enactment.
Significant Changes to Existing Law
This bill introduces a new tax credit (Section 45BB) not previously in the Internal Revenue Code. It adds requirements for digital supply chain tracing and origin certification specific to cotton, along with rules distinguishing processing locations based on trade agreements. It also expands credit transfer options under Section 6418.
Potential Impacts
- Government Agencies: Requires the Internal Revenue Service and Department of Agriculture to develop and oversee new certification, tracing, and regulatory systems, potentially increasing administrative workload.
- Citizens and Businesses: Provides financial incentives to U.S. cotton growers, yarn and fabric producers, and manufacturers to prioritize domestic materials, which could affect production costs and market decisions.
- International Relations: Differentiates treatment based on free trade agreements or preference programs (such as the African Growth and Opportunity Act), potentially influencing trade patterns with non-participating countries while excluding the Generalized System of Preferences.
Main Stakeholders
- U.S. cotton farmers and ginners.
- Domestic textile manufacturers and processors.
- Importers and sellers of cotton-based products.
- Federal agencies including the Treasury Department, Internal Revenue Service, and Department of Agriculture.
- Consumers purchasing cotton goods.
Notable Legal, Constitutional, or Political Implications
The bill relies on Congress's taxing authority under the Constitution and may raise questions about compliance with existing trade laws or World Trade Organization rules due to its location-based processing incentives. It establishes new regulatory authority for supply chain documentation, which could set precedents for similar industry-specific credits.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Murphy, Gregory F. [R-NC-3]
Cosponsors (76)
Rep. Sewell, Terri A. [D-AL-7], Rep. Rouzer, David [R-NC-7], Rep. Espaillat, Adriano [D-NY-13], Rep. Kustoff, David [R-TN-8], Rep. Scott, David [D-GA-13], Rep. Carey, Mike [R-OH-15], Rep. Davis, Donald G. [D-NC-1], Rep. Thompson, Glenn [R-PA-15], Rep. Gonzalez, Vicente [D-TX-34], Rep. Moore, Barry [R-AL-1], Rep. Adams, Alma S. [D-NC-12], Rep. Mann, Tracey [R-KS-1], Rep. Brown, Shontel M. [D-OH-11], Rep. Allen, Rick W. [R-GA-12], Rep. Figures, Shomari [D-AL-2], Rep. Pfluger, August [R-TX-11], Rep. Costa, Jim [D-CA-21], Rep. Crawford, Eric A. "Rick" [R-AR-1], Rep. Bishop, Sanford D. [D-GA-2], Rep. Scott, Austin [R-GA-8], Rep. Gray, Adam [D-CA-13], Rep. Jackson, Ronny [R-TX-13], Rep. Carbajal, Salud O. [D-CA-24], Rep. Kelly, Trent [R-MS-1], Rep. Fong, Vince [R-CA-20], Rep. Carter, Earl L. "Buddy" [R-GA-1], Rep. Pingree, Chellie [D-ME-1], Rep. Harris, Mark [R-NC-8], Rep. Guest, Michael [R-MS-3], Rep. Harder, Josh [D-CA-9], Rep. Rogers, Mike D. [R-AL-3], Rep. Vasquez, Gabe [D-NM-2], Rep. Patronis, Jimmy [R-FL-1], Rep. Collins, Mike [R-GA-10], Rep. Valadao, David G. [R-CA-22], Rep. McCaul, Michael T. [R-TX-10], Rep. Lucas, Frank D. [R-OK-3], Rep. Beatty, Joyce [D-OH-3], Rep. Cuellar, Henry [D-TX-28], Rep. Ellzey, Jake [R-TX-6], Rep. Ross, Deborah K. [D-NC-2], Rep. Strong, Dale W. [R-AL-5], Rep. Gottheimer, Josh [D-NJ-5], Rep. Kiggans, Jennifer A. [R-VA-2], Rep. Ezell, Mike [R-MS-4], Rep. Norman, Ralph [R-SC-5], Rep. Kamlager-Dove, Sydney [D-CA-37], Rep. Letlow, Julia [R-LA-5], Rep. Cohen, Steve [D-TN-9], Rep. Garcia, Sylvia R. [D-TX-29] and 26 more
Recent Actions
- 2026-01-22: Referred to the House Committee on Ways and Means.
- 2026-01-22: Introduced in House
- 2026-01-22: Introduced in House
Bill Versions
- Buying American Cotton Act of 2026 — issued 2026-01-22 — PDF (14 pages)