Sponsors (77)
The bill strengthens U.S. cotton producers and on‑shore textile processing through refundable credits and bale‑tracing rules, trading broader domestic revenue and supply‑chain transparency for added compliance burdens, enforcement risk, and likely higher downstream costs.
U.S. cotton producers and domestic textile manufacturers receive a per‑pound refundable tax credit, increasing farm and textile-sector revenue and creating stronger incentives to move processing onshore.
The bill encourages tracing and permanent bale identification, improving supply‑chain transparency and reducing fraud in U.S. cotton markets.
Taxpayers and small cotton businesses face new compliance costs and administrative burden (digital tracing, bale IDs, certification) plus higher risk of IRS/USDA audits, disputes, and delays when claiming the credit.
By favoring U.S. origin and processing, the credit is likely to raise input costs for downstream purchasers and consumers by shifting supply away from lower‑cost foreign inputs.
Based on analysis of 2 sections of legislative text.
Creates a refundable tax credit that rewards documented U.S.-origin cotton content in products, with rates and multipliers tied to processing location and input type.
Official title: To amend the Internal Revenue Code of 1986 to establish a domestic cotton consumption credit.
Introduced January 22, 2026 by Gregory Francis Murphy · Last progress January 22, 2026
Creates a new refundable business tax credit — the Domestic Cotton Consumption Credit — that rewards documented use of U.S.-origin cotton in products sold after enactment. The credit amount depends on documented pounds of qualified U.S. cotton in an eligible article, a percentage that is higher when all processing occurs in the U.S. (or in U.S. FTA/preference countries), and an applicable cotton market price set by Treasury in consultation with USDA. The law sets tracing, bale-identification, and certification rules, permits enhanced multipliers for yarn and fabric, prevents double-claims, and gives Treasury regulatory authority (with Agriculture) to implement tracing and certification systems.