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

§ 45BB

New IRC section creating the Domestic Cotton Consumption Credit

1.6×

Credit multiplier for products made with US-spun yarn — MATGA's core output

6.5×

Credit multiplier for products made with US-made fabric — full domestic chain

Bipartisan House cosponsors from cotton-growing & textile manufacturing states

§ 1 — Summary

What This Bill Does — Plain English

H.R.7230 creates a brand-new federal tax credit — § 45BB of the Internal Revenue Code — that pays manufacturers a percentage of the cotton market price for every pound of US-grown cotton in their finished products, with dramatically larger credits at every additional stage of domestic processing.

The credit is calculated as: (pounds of US cotton) × (applicable percentage) × (cotton market price). The "applicable percentage" is either 24% — if all processing happened in the US or in a country with a US free trade agreement — or 18% if any stage of processing happened in a non-FTA country (like India, China, Bangladesh, or Vietnam).

On top of the base credit, the bill creates two election-based multipliers for further domestic processing. If the finished product contains yarn that was spun in the United States from US cotton, the taxpayer can elect to apply a 1.6× multiplier. If the product contains fabric that was woven or knitted in the United States, the taxpayer can elect a 6.5× multiplier. These elections are applied separately, meaning a fully domestic chain can stack them.

The credit is fully transferable under IRC § 6418 — meaning manufacturers who don't have enough tax liability to use the full credit can sell it on the open market, exactly like solar or clean energy credits. This creates a private capital mechanism to help finance new domestic textile facilities.

To qualify, every bale of cotton must carry a USDA-assigned permanent bale identification number and be digitally traced through the entire supply chain from US farm to final retail sale. This creates an auditable, IRS-verified chain of custody — turning "Made in USA" from a marketing claim into a documented legal fact.

Base Credit Rate (Full US / FTA)

24%

Of cotton market price × lbs in finished article

Base Credit Rate (Non-FTA country)

18%

India, China, Bangladesh, Vietnam — lower incentive

US-Spun Yarn Multiplier § 45BB(d)(1)

1.6× Base

Yuma ring-spun yarn qualifies — effective rate 38.4%

US-Made Fabric Multiplier § 45BB(d)(2)

6.5× Base

Woven/knitted in US from US yarn — effective 156%

Credit Transferability

§ 6418(f)

Fully transferable — sellable to third-party investors

Cotton Types Covered

ELS + Upland

Extra long staple (Pima/Supima, Arizona) + upland

Effective Date

Day of Enactment

Applies to all eligible articles sold after enactment

§ 2 — Provisions

Six Key Provisions Explained

🏷️

Digital Bale-to-Shelf Tracing

Every bale of qualifying cotton must be assigned a permanent USDA bale identification number at ginning — an auto-generated ID for cotton grown and ginned in the US. The bill mandates digital tracking of that cotton's "movement and volume" through every stage of the supply chain from US origin to final retail sale. For MATGA: every spool of Yuma-spun yarn carries an IRS-verified provenance trail from the Arizona cotton field. This system, defined in § 45BB(c)(2)(B), also lets the IRS prevent double-claiming.

💸

Transferable Credit — § 6418

The bill explicitly adds § 45BB to the list of transferable credits under IRC § 6418(f)(1)(A). This is landmark: a manufacturer with insufficient tax liability can sell their unused credit to investors, just like solar or wind energy credits. For the Eco-Spun Yuma facility: future § 45BB credits generated by customers buying our yarn can be monetized as private financing — making the facility's economics even more attractive to investors and underwriters. This turns the tax code into a capital market for domestic cotton manufacturing.

🌾

Arizona Pima Cotton Explicitly Qualifies

Under § 45BB(c)(2)(A), "qualified cotton" includes extra long staple (ELS) cotton as defined in § 1111 of the Agricultural Act of 2014 — this is the precise statutory definition that covers Pima and Supima cotton, grown exclusively in Arizona, California, and New Mexico. The MATGA supply chain — AZ Pima farmers → Yuma ring-spinning → US brands — is built entirely on ELS cotton. The bill also covers upland cotton from southern states, giving Yuma access to a broader raw material pool.

📐

Credit Measured in Pounds of Cotton

The credit is based on the actual weight of qualified cotton in the finished article — not the retail price. "Volume" is defined in § 45BB(c)(7) as "the amount of qualified cotton in such article, as measured in pounds." This structure maximizes value for high-cotton-weight products: military uniforms, workwear, T-shirts, Olympic apparel — exactly MATGA's target markets. A 200-gram cotton tee with 0.44 lbs of certified Pima generates more credit than a lightweight luxury blouse at the same retail price.

🚫

No Double-Counting — Anti-Stacking Rule

Section 45BB(c)(1)(B) prevents the same cotton pounds from generating credits at multiple points in the supply chain. Only the first sale to an unrelated person at the final retail-ready stage triggers the credit. If a supplier intends to claim the credit, they must notify downstream buyers in writing — giving retailers and brands certainty about whether they can claim. Regulations under § 45BB(e)(1) establish a system to prevent the credit being allowed more than once for any amount of qualified cotton.

🌐

FTA vs. Non-FTA — The India Penalty

The bill draws a direct line between domestic production incentives and offshore penalties. Any processing stage in a country without a US free trade agreement — India, China, Bangladesh, Pakistan — triggers the lower 18% rate instead of 24%. Crucially, the 1.6× yarn multiplier is only available if the yarn was spun in the United States (§ 45BB(d)(1)(B)). Brands using Indian-spun yarn get neither the higher base rate nor the yarn multiplier — creating a powerful double incentive to switch to Yuma-spun domestic yarn.

§ 3 — Credit Structure

Full Credit Multiplier Table — From Bill Text

Supply Chain Scenario	Base %	Multiplier	Effective Rate	Relevance to MATGA
Cotton processed entirely or partly in non-FTA country e.g. India, China, Bangladesh, Pakistan, Vietnam	18%	1.0×	18% × lbs × price	Current India-route brands — lowest possible incentive, highest cost
All-US processing OR processing only in FTA countries CAFTA, USMCA, KORUS, Australia, etc. — no yarn/fabric election	24%	1.0×	24% × lbs × price	Step up from India route but no processing multiplier claimed
⭐ US cotton + US-spun yarn (§ 45BB(d)(1)) Yarn made in United States from qualified cotton — e.g. Yuma ring-spun	24%	1.6×	38.4% × lbs × price	🎯 MATGA's exact product. AZ Pima → Yuma ring-spun yarn → US brand
US cotton + US-made fabric (§ 45BB(d)(2)) Fabric woven/knitted in US from US cotton yarn	24%	6.5×	156% × lbs × price	Next step: US mills weaving Yuma yarn into fabric — LA textile partners
Full domestic stack: US yarn + US fabric elected separately § 45BB(d) applied separately with election at each stage	24%	Up to 6.5×	Maximum credit value	LA 2028 vision: AZ cotton → Yuma yarn → LA fabric → LA sewn Olympic shirt

§ 4 — Calculator

§ 45BB Credit Estimator

Estimate Your Annual Tax Credit

Built directly from the § 45BB formula: (lbs of US cotton) × (applicable %) × (3-year average cotton market price). Adjust for your processing stage.

Annual US Cotton Volume (lbs)

Cotton Market Price ($/lb)

Processing Stage

Base Credit (before multiplier)

—

After Stage Multiplier

—

Annual § 45BB Credit

—

Transferable per § 6418 — can be sold

§ 5 — MATGA Analysis

What H.R.7230 Means for Eco-Spun Yuma

🎯 Direct Legislative Tailwind

H.R.7230 Was Written For Facilities Like Ours

The 1.6× yarn multiplier under § 45BB(d)(1) was precisely designed to incentivize domestic ring-spinning — the exact gap the Eco-Spun Yuma facility fills. If enacted, every brand that buys Yuma-spun yarn earns a compounding financial advantage: $1.50/lb lower cost plus a federal tax credit that makes domestic yarn even more attractive than Indian imports. The digital bale tracing system also creates a verified "AZ-grown, Yuma-spun" provenance stamp that commands a genuine market premium.

38.4%

Effective § 45BB credit rate for brands using Yuma-spun yarn (24% × 1.6 multiplier)

$1.50

Per-lb cost savings vs. India-routed yarn — before the § 45BB credit even applies

§ 6418

Transferability makes credits sellable — creates private capital market for Yuma facility

Pima ✓

AZ extra long staple cotton explicitly qualifies under § 45BB(c)(2)(A) Agricultural Act § 1111

18% Gap

India-route brands get 18% vs. Yuma-route brands' 38.4% — a 20-point effective rate advantage

FTZ #219

Yuma's Foreign Trade Zone status stacks with § 45BB credits for maximum financial advantage

"The structure of § 45BB is not accidental — the 1.6× multiplier for US-spun yarn is a direct acknowledgment that spinning is the missing link in the domestic cotton supply chain. For the first time, the tax code would reward manufacturers for closing that gap. That is precisely what the High Quality Yarn Ring Spinning USA Initiative in Yuma is designed to do."

MATGA Policy Analysis · High Quality Yarn Ring Spinning USA Initiative · Yuma, AZ · February 2026

§ 6 — Cosponsors

43 Bipartisan Cosponsors — From Bill Text

All Cosponsors Listed in H.R.7230 Introduction (January 22, 2026)

Murphy [R-NC-3] — Sponsor Sewell [D-AL-7] Rouzer [R-NC-7] Espaillat [D-NY-13] Kustoff [R-TN-8] David Scott [D-GA-13] Carey [R-OH-15] Davis [R-NC-13] Thompson [D-PA-12] Vicente Gonzalez [D-TX-34] Moore [R-AL-2] Adams [D-NC-12] Mann [R-KS-1] Brown [D-OH] Allen [R-GA-12] Figures [D-AL-1] Pfluger [R-TX-11] Costa [D-CA-21] Crawford [R-AR-1] Bishop [R-NC-8] Austin Scott [R-GA-8] Gray [R-TX] Jackson [R-TX-13] Carbajal [D-CA-24] + 19 additional cosponsors on Congress.gov

States represented in introduction text: North Carolina, Alabama, New York, Tennessee, Georgia, Ohio, Pennsylvania, Texas, Kansas, California, Arkansas. Cotton-growing states dominate the coalition — notably bipartisan California representation (Carbajal D-CA-24, Costa D-CA-21) directly aligned with Pima cotton and LA textile interests. View full cosponsor list on Congress.gov →

This Bill Builds the Case for Yuma.
Help Get It Passed.

H.R.7230 is in committee. Contact your House representative to support the Buying American Cotton Act — and support the High Quality Yarn Ring Spinning USA Initiative in Yuma, AZ.

Full Bill Text on Congress.gov → ← Newsroom Our EDA Initiative