Sponsors (73)
The bill boosts income for U.S. cotton growers and encourages on‑shore processing and better traceability, but it raises compliance and administrative burdens and is likely to increase costs for downstream buyers and consumers.
Domestic cotton producers and U.S. textile manufacturers receive a per‑pound refundable credit, increasing revenue for growers and creating a stronger incentive to keep ginning and processing onshore.
Farmers and state regulators gain requirements for tracing and permanent bale identification, improving supply‑chain transparency and reducing opportunities for origin fraud in U.S. cotton markets.
Consumers and downstream businesses face higher costs because the credit favors U.S. origin and on‑shore processing, which can reduce use of lower‑cost foreign inputs and push up prices.
Taxpayers and claimants may encounter increased administrative complexity, enforcement disputes, and a higher likelihood of audits or delays as IRS/USDA resolve origin, processing, and volume questions.
Small businesses and taxpayers claiming the credit will incur additional compliance costs to implement digital tracing, permanent bale IDs, and certification systems needed to qualify for the incentive.
Based on analysis of 2 sections of legislative text.
Creates a refundable tax credit for documented U.S.-origin cotton content with tracing, bale ID, and different rates depending on where additional processing occurs.
Introduced January 22, 2026 by Gregory Francis Murphy · Last progress January 22, 2026
Creates a new refundable tax credit to reward products that use U.S.-origin cotton that is digitally traced and permanently identified through the supply chain. The credit amount depends on documented pounds of qualified cotton in a sold article, a market-price factor set by Treasury with USDA, and an applicable percentage (higher when all additional processing occurs in the U.S. or qualifying partner countries). Also requires supply-chain tracing and permanent bale identification, lets Treasury and USDA set rules and certifications, allows special larger multipliers if claimants elect to treat qualified yarn or fabric specially, and treats the credit as part of the general business credit with limited transferability; it applies to eligible articles sold after enactment. One technical section sets the Act's short title.