The "Grown in America Act of 2025" establishes a tax credit for businesses that use domestically produced agricultural commodities in their products, aiming to incentivize the use of American-grown ingredients.
David Kustoff
Representative
TN-8
The "Grown in America Act of 2025" introduces a tax credit for businesses that use domestic agricultural commodities in their products for human consumption. This credit, capped at $100,000,000, aims to incentivize the use of U.S.-produced agricultural inputs by offering a tax benefit based on the percentage of domestic agricultural commodities used. The percentage of domestic inputs required to receive the full credit increases over time, with the Secretary of Agriculture maintaining a list of agricultural commodities that cannot be produced domestically. These provisions will be effective for taxable years starting after December 31, 2025.
New Tax Credit Proposed for Companies Using American-Grown Ingredients: 'Grown in America Act of 2025'
The "Grown in America Act of 2025" introduces a new tax credit for businesses that use agricultural commodities in products made for human consumption. The goal is to boost demand for American-grown ingredients by giving companies a tax break tied to how much of their agricultural inputs are sourced domestically.
Sourcing American
The new "Domestically Produced Agriculture Credit" would equal 25% of a company's total agricultural input costs (both domestic and foreign), multiplied by the percentage of those inputs that are domestically sourced. So, the more American-grown ingredients a company uses, the bigger their tax credit. "Agricultural commodity," in this case, covers things like crops and farm-raised fish used for human consumption (SEC. 2). "Domestic agricultural input costs" specifically refers to expenses for U.S.-produced commodities used to make products in the U.S., without further processing (SEC. 2).
For example, a company that makes canned vegetables and sources 60% of its ingredients from U.S. farms in 2028 would get a credit based on that 60% figure. The credit is capped at $100,000,000 total, so there's a limit to how much is available for all businesses combined (SEC. 2).
Phasing In Domestic Sourcing
Here's the catch: to get the full credit, companies need to hit increasing targets for domestic sourcing over time. It starts at 50% in 2026 and ramps up to 85% after 2033 (SEC. 2). Think of a bakery: If they want the full tax credit in 2027, at least 55% of their ingredients (flour, sugar, etc.) need to come from American farms. The Secretary of Agriculture will maintain a list of commodities that can't be feasibly grown in the U.S., so those won't count against the domestic sourcing requirement (SEC. 2). This could be things like certain spices or tropical fruits.
Challenges and Long-Term Effects
This bill could mean big changes for food manufacturers and other businesses that rely on agricultural products. While it incentivizes using American-grown ingredients, companies that currently rely on cheaper foreign sources might face higher costs. The bill goes into effect for tax years starting after December 31, 2025, so businesses have some time to adjust (SEC. 2). If a company is part of a cooperative, they can share the tax credit with the cooperative's members (SEC. 2).