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The Buying American Cotton Act Explained

• By  Textile Excellence
• February 15, 2026

The US Senate introduced the Buying American Cotton Act (S.1919) in May 2025, with the House following in January 2026. The bill has cleared major legislative hurdles and is expected to be enacted by June after reconciliation and presidential approval.

Objective
The Act aims to boost consumption of US-grown cotton and cotton products by offering transferable tax credits to incentivise manufacturers and retailers.

Eligible products

The credit applies to cotton articles - apparel, home textiles, nonwovens - made wholly or partially from US extra-long staple or upland cotton, whether manufactured domestically or imported.

Who can claim

The first US seller of the finished product ready for retail can claim the tax credit. Credits are based on:

• The value of US-grown cotton in the product
• Or a higher-value credit if the product uses US-manufactured yarn (factor 1.6) or US-manufactured fabric (factor 6.5)

Documentation

Entities must trace and certify the US origin of cotton, yarn, or fabric via a trustworthy supply chain system to claim credits.

How the credit is calculated

The tax credit per pound is determined using the formula:

Tax Credit = (3-Year Avg Cotton Price) × Price Factor × Location Factor

• Location Factor: 24% for US-processed or FTA/preferential trade countries, 18% for other countries.

Impact
The Act leverages US cotton traceability and consumer purchasing power to strengthen domestic production and support US manufacturers. By rewarding the use of US-grown cotton and locally processed yarn or fabric, it encourages a shift toward homegrown raw material in apparel and textiles.

Timeline
With legislative reconciliation complete, voting and presidential signature are expected within 1–3 months, making June 2026 the likely enactment date.

The Buying American Cotton Act turns US cotton into a tax-incentivized commodity, creating a competitive edge for domestic manufacturers while boosting the local cotton economy.

The Act leverages US cotton traceability and consumer purchasing power to strengthen domestic production and support US manufacturers. By rewarding the use of US-grown cotton and locally processed yarn or fabric, it encourages a shift toward homegrown raw material in apparel and textiles.