Buying American Cotton Act of 2025
Sponsored By: Senator Cindy Hyde-Smith
Introduced
Summary
A domestic cotton consumption tax credit would encourage buying U.S. cotton and require trustworthy digital tracing from bale to finished product. The credit is based on documented cotton volume, an applicable percentage tied to where processing occurs, and an average market price benchmark.
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- Farmers and ginners: Would require proof of origin such as a Secretary of Agriculture assigned permanent bale identification number or other approved methods and digital tracing of bale movement and volume. This establishes documentation rules for U.S. grown extra long staple and upland cotton.
- Manufacturers and textile makers: The credit equals documented pounds times an applicable percentage times an applicable market price. The applicable percentage is 24% when processing happens only in the U.S. or in free trade agreement or unilateral preference countries, and 18% when processed in other countries. Producers may elect credit multipliers of 1.6 for qualified cotton yarn and 6.5 for qualified cotton fabric.
- Sellers and certifiers: The credit applies to the first sale to an unrelated person of an eligible article in its final retail condition. The Treasury would write regulations to certify eligible articles, prevent double claiming, set digital tracing rules, and handle reporting and transfers. The rule would apply to eligible articles sold on or after January 20, 2025.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
New cotton tax credit for businesses
If enacted, businesses could claim a new tax credit for eligible articles that contain U.S.-grown cotton. The credit would equal the documented volume of qualified cotton × an applicable percentage (24% or 18%) × a 3-year average market price. Taxpayers could elect to treat yarn separately (×1.6) or fabric separately (×6.5). Only the first sale to an unrelated buyer would qualify, and exports normally do not qualify unless tied to U.S. trade income. The credit would be part of the general business credit and be effective for items sold on or after January 20, 2025.
Digital tracing and proof for cotton
If enacted, growers, ginners, and others in the cotton supply chain would need proof-of-origin systems. The bill would require permanent bale IDs or other Secretary-approved proof and digital tracing from U.S. origin to the finished product. The Treasury and Agriculture Secretaries would write rules to stop double claims, require notifications, and set reporting and certification steps. These steps could raise recordkeeping and technology costs for producers and processors starting for items sold on or after January 20, 2025.
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Sponsors & CoSponsors
Sponsor
Cindy Hyde-Smith
MS • R
Cosponsors
Katie Britt
AL • R
Sponsored 5/22/2025
Sen. Marshall, Roger [R-KS]
KS • R
Sponsored 5/22/2025
John Boozman
AR • R
Sponsored 5/22/2025
Roger Wicker
MS • R
Sponsored 6/11/2025
Sen. Budd, Ted [R-NC]
NC • R
Sponsored 6/11/2025
Tommy Tuberville
AL • R
Sponsored 6/11/2025
Sen. Cornyn, John [R-TX]
TX • R
Sponsored 7/9/2025
Sen. Tillis, Thomas [R-NC]
NC • R
Sponsored 7/24/2025
Sen. Blackburn, Marsha [R-TN]
TN • R
Sponsored 10/27/2025
Sen. Cotton, Tom [R-AR]
AR • R
Sponsored 12/11/2025
Sen. Ossoff, Jon [D-GA]
GA • D
Sponsored 12/11/2025
Josh Hawley
MO • R
Sponsored 3/26/2026
Sen. Graham, Lindsey [R-SC]
SC • R
Sponsored 4/13/2026
Sen. Moran, Jerry [R-KS]
KS • R
Sponsored 4/13/2026
Roll Call Votes
No roll call votes available for this bill.
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