Grown in America Act of 2025
- Sponsor
- Rep. Kustoff, David [R-TN-8]
- Committees
- Ways and Means Committee (primary)
- Last action
- Feb 27, 2025
Bottom line
The bill aims to boost domestic agricultural production and consumption by offering a significant tax incentive to companies that prioritize U.S.-grown ingredients in their products, with increasing domestic sourcing requirements over time.
What it actually does
This bill establishes a new federal tax credit, the "Domestically Produced Agriculture Credit," for businesses that purchase agricultural commodities produced in the United States. The credit amount is capped at $100 million and is calculated based on a percentage of total agricultural input costs, scaled by the proportion of those inputs that are domestically sourced. Eligibility for the credit requires a rising percentage of total agricultural inputs to be domestically sourced over time, starting at 50% in 2026 and reaching 85% after 2033.
Proponents argue
Supporters argue that this credit will strengthen the American agricultural sector, enhance food security, and create jobs by encouraging food manufacturers and processors to source their raw materials domestically. They contend it will reduce reliance on foreign agricultural imports and provide a competitive advantage to U.S. farmers, fostering economic resilience.
Opponents contend
Opponents might argue that this credit could distort agricultural markets, potentially increasing costs for consumers or favoring certain domestic producers over others. They may also raise concerns about potential trade disputes if the credit is perceived as an unfair subsidy that disadvantages foreign agricultural producers, leading to retaliatory measures.
The bill is relatively short and clearly structured, making it accessible for an informed reader to understand its core provisions within a reasonable timeframe.
Section 2(a), adding new Section 45BB(a) to the Internal Revenue Code of 1986.
Creation of the Domestically Produced Agriculture Credit
This provision establishes a new tax credit for businesses that purchase agricultural commodities. The credit amount is the lesser of $100,000,000 or 25% of the taxpayer's total agricultural input costs multiplied by their "applicable percentage" (the ratio of domestic to total agricultural input costs). This structure incentivizes businesses to increase their domestic sourcing to maximize the credit.
Supporters argue
Supporters argue this credit directly incentivizes companies to invest in American agriculture, supporting farmers and related industries by increasing demand for domestically produced goods and fostering economic growth.
Critics contend
Critics might argue that this credit could disproportionately benefit large corporations with significant agricultural input costs, potentially creating an uneven playing field for smaller businesses or those with established international supply chains.
Tradeoffs
This provision balances the goal of supporting domestic agriculture with potential market distortions and the cost to the federal treasury, aiming for a targeted incentive.
Section 2(b), adding new Section 45BB(b) to the Internal Revenue Code of 1986.
Defining Key Terms for Credit Eligibility
This section defines crucial terms like "applicable percentage," "agricultural commodity," "domestic agricultural input costs," "foreign agricultural input costs," and "total agricultural input costs." It specifies that an "agricultural commodity" includes certain crops, livestock products (excluding live animals), and farm-raised fish, used for human consumption or products thereof. Domestic costs are for U.S.-produced commodities used in U.S.-produced, unprocessed human consumption products.
Section 2(a), adding new Section 45BB(c) to the Internal Revenue Code of 1986.
Phased-in Domestic Sourcing Requirement for Credit Eligibility
This provision introduces a critical condition for receiving the credit: a taxpayer's 3-year average "applicable percentage" (domestic input costs divided by total input costs) must meet a rising threshold. This threshold starts at 50% in 2026 and gradually increases to 85% after 2033. If a taxpayer fails to meet this threshold, their credit for that taxable year is reduced to zero, creating a strong incentive for long-term supply chain adjustments.
Section 2(a), adding new Section 45BB(d) to the Internal Revenue Code of 1986.
Credit Apportionment for Agricultural Cooperatives
This provision allows eligible cooperative organizations to apportion the domestically produced agriculture credit among their patrons. This means that the tax benefits can be passed through to individual farmers or members of the cooperative, rather than being retained solely by the cooperative entity itself, ensuring broader distribution of the incentive.
Section 2(c) of the Grown in America Act of 2025.
Identification of Domestically Unavailable Agricultural Commodities
This section mandates the Secretary of Agriculture to create and maintain a list of agricultural commodities that cannot feasibly be produced, grown, or raised domestically during each calendar year. Expenses for purchasing commodities on this list are excluded from the "total agricultural input costs" calculation, meaning they do not negatively impact a taxpayer's "applicable percentage" for credit eligibility.
Section 2(b) of the Act, amending Section 38(b) and 38(c) of the Internal Revenue Code.
Integration into General Business Credit and Specific Limitations
This provision integrates the new domestically produced agriculture credit into the existing general business credit framework. It also establishes special rules for this credit, including treating the tentative minimum tax as zero for calculation purposes, modifying certain percentage limitations (e.g., 50% instead of 25%), and adjusting carryback/carryforward periods to 10 years back and 11 years forward (instead of 1 year back and 20 years forward).
The credit amount is directly tied to an "applicable percentage" which is the ratio of domestic agricultural input costs to total agricultural input costs. This means that even if a company has high total input costs, if their domestic sourcing percentage is low, their credit will be significantly reduced.
Section 45BB(a)(1)(C) and 45BB(b)(1)
Why it matters:This is standard legislative practice to define terms separately, but the direct scaling effect on the credit amount might be overlooked by a casual reader.
Case for: Supporters would argue this ensures the credit is directly proportional to a company's commitment to domestic sourcing, making it a true incentive for increasing U.S. agricultural purchases rather than just rewarding existing practices.
Case against: Critics might argue that this formula could be complex for businesses to track and optimize, especially if domestic supply chains are volatile or difficult to quantify precisely, potentially adding administrative burden.
Estimated impact: This mechanism directly influences the magnitude of the credit received by every eligible taxpayer, making it a central determinant of the credit's effectiveness.
The "total agricultural input costs" (the denominator in the applicable percentage calculation) excludes expenses for agricultural commodities that the Secretary of Agriculture lists as "not feasibly produced, grown, or raised domestically."
Section 45BB(b)(5)(B) and Section 2(c) of the Act.
Why it matters:This is standard legislative practice for defining terms and then providing administrative instructions. However, its significant impact on the credit calculation could be easily missed by a reader focusing only on the main credit provisions.
Case for: Proponents would argue this is a vital flexibility mechanism, preventing businesses from being penalized for importing commodities that simply aren't available domestically, thus making the credit more practical and less disruptive to existing essential supply chains.
Case against: Opponents might raise concerns about the potential for lobbying and political influence in the Secretary's listing process, which could create loopholes or unfair advantages for certain industries, undermining the credit's core intent.
Estimated impact: This provision could significantly alter the "applicable percentage" for businesses relying on specific imported commodities, making the credit more accessible to them and influencing their sourcing decisions.
The bill includes specific rules for how the new credit interacts with the general business credit. Notably, for this credit, the tentative minimum tax is treated as zero, certain percentage limitations are adjusted (e.g., 50% for 25%), and carryback/carryforward periods are set to 10 years back and 11 years forward.
Section 2(b)(2) of the Act, amending Section 38(c) of the Internal Revenue Code.
Why it matters:This is standard legislative practice for integrating new credits into existing tax structures. The technical nature of these changes means they are often overlooked by non-specialist readers.
Case for: Supporters would argue these modifications are essential to make the credit genuinely valuable and usable for businesses, ensuring it can effectively reduce tax liability and provide long-term financial planning flexibility, thereby maximizing its incentive effect.
Case against: Critics might argue that these special, more generous rules for this particular credit could set a precedent for other credits, potentially leading to increased complexity and revenue loss in the overall tax system, without sufficient justification.
Estimated impact: This provision significantly enhances the financial utility and flexibility of the credit for eligible taxpayers, making it a more attractive and impactful incentive.