H.R. 7230: Buying American Cotton Act of 2026
Sponsor
Gregory Murphy
Republican · NC-3
Bill Progress
Latest Action · Jan 22, 2026
Referred to the House Committee on Ways and Means.
Traceable U.S. cotton gets a tax break
Why it matters
A 24% tax credit is on the table for products made with traceable U.S.-grown cotton, while some supply chains would get 18% or nothing at all. The bill also gives bigger boosts for U.S.-made yarn and fabric, which could shift where brands source cotton and how much proof they need to keep.
H.R. 7230 creates a new business tax credit for the first retail-ready sale of a product made in whole or in part with qualified U.S.-grown cotton. The value starts with the documented pounds of cotton in the item, then applies either a 24% or 18% rate, then multiplies that by a 3-year average cotton market price set by Treasury in consultation with Agriculture.
The higher 24% rate applies when processing stays in the United States or in countries covered by a U.S. free trade agreement or certain U.S. preference programs. If processing happens at any stage in a country outside those buckets, the rate drops to 18%.
The bill gives extra incentives to domestic textile production. U.S.-made cotton yarn can use a 1.6 multiplier, and U.S.-made cotton fabric can use a 6.5 multiplier, as long as they are made from qualified U.S. cotton.
This is also a supply-chain documentation bill. To qualify, the cotton must have a permanent bale ID or other proof Treasury accepts, and its movement and volume must be digitally traced from U.S. origin through the last stage of processing.
The credit only applies once. If a component already generated the credit, a later seller cannot claim it again on the finished product.
H.R. 7230 Bill Summary
What H.R. 7230 actually does.
Retail products with U.S. cotton get a new tax credit
H.R. 7230 creates a credit for the first sale of a retail-ready product made in whole or in part with qualified U.S.-grown cotton. The amount is based on the documented pounds of cotton in the product, a credit percentage, and a 3-year average cotton market price.
Processing location changes the credit rate
The credit rate is 24% if processing happens only in the United States or in countries covered by a U.S. free trade agreement or certain preference programs. It falls to 18% if processing happens at any stage in a country outside those categories.
U.S.-made yarn and fabric get bigger boosts
The bill adds a 1.6 multiplier for qualifying U.S.-made cotton yarn and a 6.5 multiplier for qualifying U.S.-made cotton fabric. Both must be made in the United States from qualified U.S.-grown cotton.
You have to prove where the cotton came from
To claim the credit, businesses must show that the cotton was grown in the United States using a permanent bale identification number or other proof Treasury accepts. They also have to digitally trace the cotton's movement and volume through the supply chain.
Only one seller can claim it
The bill limits the credit to the first qualifying sale to an unrelated buyer. If a component already generated the credit, the finished product cannot generate a second one.
Export sales are mostly left out
Sales for use or consumption outside the United States generally do not qualify. The main exception is when the income is tied to a U.S. trade or business.
Who benefits from H.R. 7230?
U.S. cotton growers
Growers of U.S. upland and extra long staple cotton would be at the center of the credit, because only cotton grown in the United States qualifies. If brands shift sourcing to capture a 24% credit, demand for documented U.S. cotton could rise.
Domestic yarn and fabric mills
Mills making yarn and fabric in the United States get the clearest added incentive. The 1.6 and 6.5 multipliers could make domestic textile inputs much more valuable inside the credit formula.
Brands that can trace their cotton
Retailers and manufacturers with strong tracking systems could turn cotton sourcing into a tax asset. Companies already collecting bale-level and production data would likely have an easier time qualifying.
Supply chains built around U.S. trade partners
Businesses processing cotton in the United States or in qualifying trade-partner countries would get the full 24% rate instead of the lower 18% rate.
Who is affected by H.R. 7230?
Import-heavy brands using non-U.S. cotton
If your products do not use U.S.-grown cotton, this credit does not apply. The bill is written specifically around cotton grown in the United States.
Companies processing in nonqualifying countries
Businesses that route cotton through countries outside U.S. free trade agreements or covered preference programs could still qualify, but only at the lower 18% rate.
Manufacturers with complex sourcing records
These firms would have new compliance work. They would need proof of U.S. origin, digital tracing, and records showing cotton volumes through multiple production stages.
Suppliers and sellers sharing the same product chain
Companies would need tighter coordination over who claims the credit first. The bill blocks multiple claims on the same cotton once a component or finished product has already generated the credit.
HR7230 Legislative Journey
House: Committee Action
Jan 22, 2026
Referred to the House Committee on Ways and Means.
About the Sponsor
Gregory Murphy
Republican, North Carolina's 3rd congressional district · 7 years in Congress
Committees: Joint Committee on Printing, House Administration, Veterans' Affairs
View full profile →
Cosponsors (76)
This bill has 76 cosponsors: 29 Democrats, 47 Republicans, reflecting bipartisan support. Cosponsors represent 22 states: Alabama, Arkansas, Arizona, and 19 more.
Terri Sewell
Democrat · AL
David Rouzer
Republican · NC
Adriano Espaillat
Democrat · NY
David Kustoff
Republican · TN
David Scott
Democrat · GA
Mike Carey
Republican · OH
Donald Davis
Democrat · NC
Glenn Thompson
Republican · PA
Vicente Gonzalez
Democrat · TX
Barry Moore
Republican · AL
Alma Adams
Democrat · NC
Tracey Mann
Republican · KS
Committee Sponsors
Ways and Means Committee
7 of 45 committee members cosponsored
21 Republicans across this committee haven't cosponsored yet. Mobilize their constituents
What laws does H.R. 7230 change?
1 changes
Sections Amended
Section 38(b) of such Code
striking ``plus'' at the end of paragraph (40), by striking the period at the end of paragraph (41), and by adding at the end the following new paragraph: ``(42) the domestic cotton consumption credit determined under section 45BB
H.R. 7230 Quick Facts
- Committee
- Ways and Means
- Chamber
- House
- Policy
- Taxation
- Introduced
- Jan 22, 2026
Referred to the House Committee on Ways and Means.
Jan 22, 2026
Official Sources
Official Congress.gov page for the Buying American Cotton Act of 2026, including status, text, and actions.
IRS overview page for business tax credits, relevant because the bill creates a new business credit in the Internal Revenue Code.
Official USTR page explaining U.S. free trade agreements, relevant because the bill's 24% rate depends on processing occurring in FTA countries.
Official GovInfo publication for the Agricultural Act of 2014, which the bill cites for definitions of extra long staple and upland cotton.
H.R. 7230 Common Questions
What does H.R. 7230 actually do?
H.R. 7230 creates a business tax credit for the first retail-ready sale of products made with traceable U.S.-grown cotton. The credit is tied to the pounds of cotton in the item and the market price of cotton.
How big is the tax credit under H.R. 7230?
The base rate is 24% if processing stays in the United States or certain U.S. trade-partner countries. It drops to 18% if processing happens in a nonqualifying country.
Why do U.S.-made yarn and fabric matter in this bill?
Because H.R. 7230 gives extra multipliers to domestic textile inputs: 1.6 for qualifying U.S.-made yarn and 6.5 for qualifying U.S.-made fabric. That can make the credit much larger.
Do companies have to trace the cotton to qualify?
Yes. The bill requires a permanent bale ID or other accepted proof that the cotton was grown in the United States, plus digital tracing of its movement and volume through the supply chain.
Can the same cotton product generate the credit twice?
No. If a component already generated the credit, a later seller cannot claim it again on the finished product. The bill is designed to allow one claim, not multiple claims along the chain.
Does the credit apply to exports?
Usually no. H.R. 7230 generally excludes sales for use or consumption outside the United States, unless the income is tied to a U.S. trade or business.
Who is most likely to benefit from H.R. 7230?
U.S. cotton growers, domestic yarn and fabric mills, and brands that can document where their cotton came from. Companies using non-U.S. cotton would not qualify.
Has H.R. 7230 become law yet?
No. According to the bill metadata provided, H.R. 7230 was introduced and referred to the House Ways and Means Committee. It would need to move through Congress before any credit could take effect.
Based on H.R. 7230 bill text
H.R. 7230 Bill Text
“To amend the Internal Revenue Code of 1986 to establish a domestic cotton consumption credit.”
Source: U.S. Government Publishing Office
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