The Grown in America Act of 2025 adds section 45BB to the Internal Revenue Code to create a domestically produced agriculture credit. The statute sets the credit equal to 25% of a taxpayer's total agricultural input costs multiplied by the percentage of those inputs that are U.S.-produced, subject to a per-taxpayer cap of $100 million, and excludes commodities the Secretary of Agriculture certifies cannot be produced domestically.
The bill phases in a domestic-sourcing requirement through a rising 3-year average threshold that can render a taxpayer ineligible if their domestic share is too low. It also includes special rules for agricultural cooperatives, aggregation for related entities, and modifications to how this credit interacts with the general business credit and carryforward/AMT computations.
The measure is designed to steer procurement toward U.S. producers, with consequential compliance, administrative, and market effects for processors, cooperatives, and USDA.
At a Glance
What It Does
The bill creates a new business credit equal to 25% of total agricultural input costs multiplied by the share of those inputs produced in the U.S., limited to $100 million per taxpayer per year. It disqualifies taxpayers whose 3‑year average domestic share falls below staged thresholds and lets eligible agricultural cooperatives apportion the credit to patrons.
Who It Affects
Food manufacturers, processors, restaurants, and other enterprises that buy agricultural commodities; agricultural producers and farm cooperatives; tax and compliance teams that must document domestic sourcing; and USDA, which must publish a list of commodities unavailable domestically.
Why It Matters
The credit creates a direct financial incentive to source inputs domestically, potentially reshaping purchasing decisions across the food supply chain and increasing demand for U.S. commodity producers. It also adds recordkeeping and verification obligations and alters the tax treatment and timing of related credits through special general business credit rules.
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What This Bill Actually Does
The core feature of the bill is a new tax credit that rewards businesses for using agricultural commodities produced in the United States. The credit is calculated by taking 25% of a taxpayer’s total agricultural input costs for the year and then multiplying that amount by the taxpayer’s applicable percentage, which is the ratio of domestic agricultural input costs to total agricultural input costs.
The actual credit a taxpayer can claim is the lesser of that product or $100 million for the taxable year.
The bill defines which commodities qualify by cross‑referencing established lists in prior farm laws and adds farm‑raised fish. It also says that commodities the Secretary of Agriculture determines cannot be feasibly produced, grown, or raised domestically (and places those items on a maintained list) are excluded from the definition of total agricultural input costs for credit calculation purposes.
That exclusion effectively prevents taxpayers from inflating their ‘‘total’’ denominator where domestic supply simply is not available.To prevent the credit from subsidizing businesses that mainly rely on imports, the bill introduces a rising ineligibility threshold based on a taxpayer’s 3‑year average applicable percentage. The thresholds begin at 50% for taxable years beginning in 2026 and increase incrementally to 85% after 2033; if a taxpayer’s three‑year domestic share does not meet the applicable threshold, the credit is reduced to zero for that taxable year.
The bill also contains an aggregation rule that treats controlled groups as a single taxpayer for purposes of the credit.For cooperatives, the bill allows an eligible cooperative to elect to apportion some or all of its credit to patrons based on quantity or value of patronage. That election is made on a timely filed return and is irrevocable for the year; apportioned credits are claimed by patrons in the first tax year ending on or after the cooperative’s payment period or after the patrons receive notice.
Finally, the statute amends the general business credit rules to treat the domestically produced agriculture credit separately, modifies tentative minimum tax and limitation computations for the credit, and shortens carryforward periods relative to many other business credits.
The Five Things You Need to Know
Credit formula: The annual credit equals the lesser of (25% × total agricultural input costs × applicable percentage) or $100,000,000 per taxpayer.
Applicable percentage: A taxpayer’s applicable percentage is domestic agricultural input costs divided by total agricultural input costs; the credit phases out entirely if a taxpayer’s 3‑year average percentage falls below staged thresholds rising from 50% (2026) to 85% (after 2033).
USDA exclusion list: The Secretary of Agriculture must publish a yearly list of agricultural commodities that cannot be feasibly produced domestically; costs for those commodities are excluded from a taxpayer’s total agricultural input costs for credit calculation.
Cooperative apportionment: Eligible agricultural cooperatives may irrevocably elect on their timely return to apportion some or all of their credit to patrons based on patronage, with apportioned amounts claimed by patrons in their next eligible taxable year.
Special tax treatment: The bill integrates the new credit into the general business credit but applies it separately with modified tentative minimum tax and limitation rules and shorter carryforward windows (10–11 years instead of typical 20–21 years).
Section-by-Section Breakdown
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Short title
Designates the bill as the 'Grown in America Act of 2025.' This is solely a naming provision and has no operational effect on implementation or tax mechanics.
Creates the domestically produced agriculture credit and definitions
Adds section 45BB to the Internal Revenue Code. Subsection (a) sets the credit formula (25% of total agricultural input costs times the applicable percentage, capped at $100 million). Subsection (b) supplies key definitions: applicable percentage (domestic/total), agricultural commodity (ties to existing farm‑law lists plus farm‑raised fish), domestic vs. foreign agricultural input costs (expenses for commodities used in production sold for human consumption without further processing), and an exception that excludes commodities listed by USDA under section 2(c). Practically, taxpayers must segregate purchases by origin and maintain supporting records to establish domestic and foreign input amounts.
Secretary of Agriculture to maintain a domestically unavailable commodities list
Directs USDA to publish and maintain, for each calendar year after enactment, the agricultural commodities that cannot feasibly be produced, grown, or raised domestically. That list operates as a carve‑out: expenses for listed commodities are not counted in a taxpayer’s total agricultural input costs when computing the credit, which prevents distorting the applicable percentage where domestic supply shortages exist. The provision creates an administrative obligation for USDA and establishes a potential point of dispute between taxpayers and the agency over commodity classifications.
Eligibility thresholds, 3‑year averaging, and cooperative apportionment
Subsection (c) creates staged applicable thresholds (50% in 2026 up to 85% after 2033) and defines the 3‑year average applicable percentage used to determine eligibility; failure to meet the threshold reduces the credit to zero for the taxable year. Subsection (d) allows eligible agricultural cooperatives to apportion credit to patrons based on business volume; the election is made on the cooperative’s timely return, is irrevocable, and apportioned credits are claimed by patrons in a defined taxable year window. These mechanics introduce timing and cash‑flow considerations for cooperatives and their members.
Integration into the general business credit, aggregation, regs, and effective date
The bill amends section 38 to include the new credit within the general business credit framework but directs that the domestically produced agriculture credit be calculated separately with special limitation adjustments: the tentative minimum tax is treated as zero for purposes of one limitation, various percentage and dollar thresholds in the limitation are modified, and carryforward periods are shortened to 10–11 years. The aggregation rule treats controlled groups as a single taxpayer for the credit. The Secretary of the Treasury is authorized to issue regulations. The amendments apply to taxable years beginning after December 31, 2025.
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Explore Agriculture in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- U.S. commodity producers and farmers: Increased procurement preference for domestically produced commodities will likely raise demand and prices for qualifying producers, directly rewarding primary agricultural suppliers.
- Domestic food processors and manufacturers that can source locally: These firms capture the credit directly, lowering effective input costs when they can document and increase their share of U.S. inputs.
- Agricultural cooperatives and their patrons: Cooperatives may allocate credit to patrons, effectively transferring tax value to member‑producers or processors and enabling shared benefit across the supply chain.
- Rural economies and upstream suppliers: Higher domestic sourcing can cascade to greater local economic activity in production, storage, and transport services linked to qualifying commodities.
Who Bears the Cost
- Import‑dependent processors and food companies: Firms that rely on foreign agricultural inputs will either lose the credit or face higher costs to retool sourcing, possibly making them less competitive or forcing price increases.
- Small processors and buyers without access to domestic suppliers: Businesses unable to secure reliable domestic inputs will carry compliance burdens without the offset of the credit and may struggle to meet the rising ineligibility thresholds.
- USDA and Treasury/IRS: USDA must compile and defend the domestically unavailable commodities list, and Treasury/IRS must create guidance, audit procedures, and enforcement capacity for origin verification—an administrative cost and implementation burden.
- Taxpayers with complex supply chains: Companies will need to invest in traceability, recordkeeping systems, and external tax advice to allocate input costs by origin and survive compliance scrutiny.
Key Issues
The Core Tension
The central dilemma is between using a tax lever to accelerate domestic sourcing (supporting producers and supply‑chain resilience) and the practical cost of doing so: higher procurement costs, complex origin verification, and blunt ineligibility thresholds that can penalize legitimate buyers and distort supply chains without guaranteeing domestic supply expansion.
The bill’s mechanics create several practical tensions. First, measuring ‘‘domestic’’ versus ‘‘foreign’’ input costs in multi‑ingredient, multi‑stage supply chains will be administratively complex; firms must trace origin for inputs used in products sold ‘‘without further processing,’’ a phrase that invites disputes about which stage of processing qualifies.
The law’s reliance on financial expense allocation rather than physical traceability could create inconsistent treatment across taxpayers and incentivize reclassification of costs.
Second, the USDA list that excludes domestically unavailable commodities is necessary but operationally fraught. USDA will need clear, transparent criteria and an appeals mechanism because the list changes the denominator used to compute credits and thus materially affects credit size.
Disagreements over listing decisions could generate litigation and uneven application across sectors. Third, the 3‑year average threshold disproportionately penalizes seasonal businesses, start‑ups, and firms that are increasing domestic sourcing but have not yet achieved the multi‑year average; the all‑or‑nothing nature of the ineligibility rule (credit reduced to zero) is blunt and may produce cliff effects.
Finally, the bill contains drafting inconsistencies and technical risks—for example, an internal cross‑reference to section numbers appears inconsistent in the general business credit amendment—and it compresses the credit’s carryforward and interacts with AMT rules in nonstandard ways. Those drafting issues will need correction to avoid unintended tax outcomes and to ensure IRS and taxpayers interpret the special limitation rules consistently.
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