The U.S. Senate introduced the Buying American Cotton Act (S.1919) in May 2025, which aims to incentivize the consumption of products manufactured with U.S. cotton. The bill was concurrently submitted by the House of Representatives on January 22, 2026, and has passed the review of the House Ways and Means Committee. Going forward, the Senate and the House will reconcile a unified version of the text before holding another vote; upon passage, it will be sent to the President for signature or veto. If vetoed, Congress may attempt to override the veto with a two-thirds majority vote.

Following six months of deliberations, most legislative procedures in both chambers have been completed. The subsequent text reconciliation and voting are expected to take 1 to 3 months, and the presidential signature process typically takes around 10 days. Accordingly, the bill is expected to be officially enacted by June.

Objective: By leveraging the traceability of U.S. cotton and the purchasing power of U.S. consumers, the Buying American Cotton Act authorizes transferable tax credits to incentivize the consumption of U.S. cotton and U.S. cotton manufactured products.

Eligible Articles: Cotton products, including but not limited to apparel, home textiles, and nonwovens, either fully manufactured in the United States or imported into the United States, that are made in whole or in part from U.S. extra-long staple cotton or upland cotton.

Eligible Taxpayer: The first U.S. entity who sells an eligible article in the United States in its final condition, meaning the product is now "ready for sale" at retail to the consumer. The taxpayer may claim the credit based on the value of the U.S.-grown cotton in the eligible article, or instead, may elect to claim a higher-value credit based on the value of the U.S.-manufactured yarn or the U.S.-manufactured fabric, if the taxpayer can demonstrate the eligible article was made from U.S.-manufactured yarn or fabric, respectively.

Documenting the Use of U.S. Cotton: Entities claiming the tax credits must be able to demonstrate proof of U.S. origin through a trustworthy supply chain tracing system that certifies the provenance and volume of the cotton in the eligible article, or of the yarn or fabric if either of those credit options are selected.

Calculation of the Tax Credits: The value of the tax credit is determined as the product of the volume of U.S.-grown cotton in the eligible article and a factored percentage of the rolling three-year average market price. If the taxpayer elects a credit based on U.S.-manufactured yarn, the value is multiplied by a price factor of 1.6, and for U.S.-manufactured fabric, multiplied by a price factor of 6.5, to incentivize and reward the consumption of U.S.-manufactured goods.

Factors Determining the Value of the Tax Credits: In the case of an eligible article that is processed either wholly in the United States or in a country or countries with which the United States has entered into a free trade agreement or for which the United States has extended benefits through a preferential trade arrangement, a location factor of 24% is used. In the case of an eligible article that was subject to processing at any stage in any other country, a location factor of 18% is used.

Tax Credit Formula: The per-pound value of the tax credit is determined by the formula:

Tax Credit = (3-Yr Average Cotton Price) * (Price Factor) * (Location Factor)

25Buying-American-Cotton-Act_May-18-2025.pdf