Buying American Cotton Act of 2025

The Buying American Cotton Act of 2025 would create a new domestic cotton consumption credit (Sec. 45BB) inside the federal tax code. The credit is designed to encourage U.S.-origin cotton use and to require a trustworthy, traceable supply chain for cotton products. Taxpayers selling eligible articles containing qualified U.S. cotton could claim a credit based on the documented volume of qualified cotton in the article, modified by an applicability factor (percentage) and a market-price factor. The act also provides enhanced credits for eligible articles that use qualified cotton yarn or fabric, and it sets out detailed definitions for what counts as qualified cotton, eligible articles, processing, and trade-related concepts (free trade agreements and unilateral preference programs). Regulations would be issued to prevent double credit, oversee tracing, and certify qualified cotton. The credit would apply to eligible articles sold on or after January 20, 2025, and would be claimed as part of the general business credit.