H.R. 7230: Buying American Cotton Act of 2026

Introduced Jan 22, 202676 cosponsors

Sponsor

Gregory Murphy

Republican · NC-3

Bill Progress

IntroducedJan 22

Committee

Pass House

Pass Senate

Signed

Law

Latest Action · Jan 22, 2026

1/4

Referred to the House Committee on Ways and Means.

Make it with American cotton, claim a tax credit

4 min readLast updated June 16, 2026

Why it matters

H.R. 7230 would pay businesses to use cotton grown on U.S. soil — a 24% credit when the whole supply chain stays in the United States or its trade partners, and a 6.5x boost on top of that for fabric woven in American mills. It has already pulled in 76 cosponsors from both parties, a rare show of agreement that says cotton-state jobs cross the aisle.

H.R. 7230 creates a new business tax credit for the first retail-ready sale of a product made with U.S.-grown cotton. The credit starts with the documented pounds of cotton in the item, applies a credit rate, then multiplies that by the average cotton market price over the prior three years, set by Treasury with the Agriculture Department.

The rate depends on where the cotton was processed. Keep every stage inside the United States — or in a country with a U.S. free trade agreement or covered preference program — and you get 24%. Route it through any nonqualifying country at any stage, and it drops to 18%.

Domestic textile work earns more. Cotton yarn spun in the United States can use a 1.6 multiplier, and U.S.-made cotton fabric can use a 6.5 multiplier, as long as both come from qualified U.S. cotton.

It's also a paperwork bill. To qualify, the cotton needs a permanent bale ID number, or other proof Treasury accepts, and its movement and volume must be digitally traced from its U.S. origin through the last stage of processing.

The credit can be claimed only once. If a component already earned it, a later seller can't 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.

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Tracking floor activity — no debate on H.R. 7230 yet. Updates when a legislator speaks on the record.

HR7230 Legislative Journey

1 actions

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

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Cosponsors (76)

This bill gained 2 cosponsors in the last 30 days

This bill has 76 cosponsors: 29 Democrats, 47 Republicans, reflecting bipartisan support. Cosponsors represent 22 states: Alabama, Arkansas, Arizona, and 19 more.

29Democrats47Republicans·22 statesBipartisan

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

19D26R

|7 signed38 not yet

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

Full Text

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

Cosponsors

76+2

+71 more

Committee: Ways and Means
Chamber: House
Policy: Taxation
Introduced: Jan 22, 2026

Referred to the House Committee on Ways and Means.

Jan 22, 2026

Constituent Resources

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Get notified when this bill moves

Official Sources

H.R. 7230 on Congress.gov

Official Congress.gov page for the Buying American Cotton Act of 2026, including status, text, cosponsors, and actions.

IRS — About Form 3800, General Business Credit

The bill adds the domestic cotton consumption credit to the general business credit under Section 38, which businesses claim on Form 3800.

IRS — Business Tax Credits

IRS overview of the business tax credits that make up the general business credit, the framework this new cotton credit would join.

U.S. Trade Representative — Free Trade Agreements

The bill's full 24% rate depends on cotton being processed in the United States or in a country with a U.S. free trade agreement.

U.S. Trade Representative — African Growth and Opportunity Act (AGOA)

AGOA is one of the unilateral preference programs the bill names as qualifying processing locations for the higher credit rate.

govinfo — Agricultural Act of 2014 (Public Law 113-79)

The bill draws its definitions of extra long staple and upland cotton from sections 1111 and 1207(c) of this Act.

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H.R. 7230 Common Questions

What does H.R. 7230 actually do?

It creates a business tax credit for the first retail-ready sale of a product made with U.S.-grown cotton. The amount is tied to the pounds of cotton in the item, a credit rate, and the recent 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 get bigger credits?

The bill rewards keeping the whole textile process at home. Qualifying U.S.-made cotton yarn uses a 1.6 multiplier, and U.S.-made cotton fabric uses a 6.5 multiplier — which can make the credit much larger than for raw cotton alone.

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?

Not yet. It was introduced in January 2026 and referred to the House Ways and Means Committee, where it now has 76 bipartisan cosponsors. It would still need to pass the House and Senate before any credit could take effect.

Based on H.R. 7230 bill text