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The Buying American Cotton Act of 2026 establishes a federal tax credit for businesses that sell products made from U.S.-grown cotton. The credit is calculated based on the volume of qualified cotton in the product and the applicable cotton market price, with higher credit rates (24%) for cotton processed only in the U.S. or in countries with which the U.S. has free trade agreements, and lower rates (18%) for cotton processed in other countries. The bill includes enhanced credit multipliers for products containing U.S.-made cotton yarn (1.6x) or U.S.-made cotton fabric (6.5x), and requires a digital supply chain tracing system to verify the U.S. origin of cotton.
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