S. 1919: Buying American Cotton Act of 2025

The Buying American Cotton Act of 2025 aims to encourage the consumption of cotton produced in the United States. The bill proposes the establishment of a domestic cotton consumption credit, which allows eligible businesses to receive a tax credit for selling products made from qualified American cotton.

Key Provisions of the Bill

The main goals of the legislation include:

• Promoting the use of American-grown cotton and products made from it.
• Creating a traceable supply chain system for monitoring the processing of American cotton.

Domestic Cotton Consumption Credit

Under this bill, businesses can claim a tax credit based on:

1. The volume of qualified cotton in eligible products sold.
2. The applicable percentage based on the processing of the cotton.
3. The established market price of cotton.

Definitions and Eligibility

Various terms are defined to clarify who qualifies for the credit:

• Qualifying Sale: The first sale of an eligible product to an unrelated person.
• Eligible Article: Products made in part or whole from certified qualified cotton and in their final condition for retail sale.
• Qualified Cotton: Cotton grown in the United States that meets specific certification requirements, including digital tracking through the supply chain.

Credit Rates

The tax credit will differ based on the processing location of the cotton:

• 24% for cotton processed entirely in the U.S. or with additional processing in countries with U.S. free trade agreements.
• 18% for cotton processed in countries without such agreements.

Special Provisions for Cotton Yarn and Fabric

The bill includes provisions for cotton yarn and fabric, providing increased credit amounts:

• 1.6 times the credited amount for qualified cotton yarn.
• 6.5 times the credited amount for qualified cotton fabric.

Implementation and Regulations

The U.S. Secretary of the Treasury will be responsible for implementing regulations to ensure:

• Prevention of double claims for the same cotton.
• Digital tracking of qualified cotton through its supply chain.
• Certification of cotton as qualified according to the established guidelines.

Effective Date

The provisions of this bill will apply to eligible articles sold on or after January 20, 2025.

Relevant Companies

• DE (Deere & Company) - As a manufacturer of agricultural machinery that can process cotton, changes in cotton consumption could impact the sale of machinery and parts tailored for cotton production.
• ADM (Archer-Daniels-Midland Company) - This company, involved in the processing of agricultural products, including cotton oil, might see changes in its processing capabilities and product offerings related to credit incentives.