GAO Maps Policy Options for US Textile Circular Economy

The US Government Accountability Office has laid out a menu of policy options for building a textile circular economy, with extended producer responsibility (EPR) schemes and circularity-linked tax credits at the top of the list. The October 2026 report follows the agency's December 2024 work on federal efforts to tackle textile waste, and it lands at a moment when several US states and the European Union are already proposing or enacting textile EPR legislation.

For sourcing directors and compliance leads, that's the practical takeaway: the options GAO describes aren't hypothetical. According to the agency, "some US states and other countries are proposing, enacting, or implementing most of the identified policy options" that could support the development of a textile circular economy in the US.

What did GAO actually propose?

The report identifies a "number of policy options" built on a review of literature, site visits and interviews with 49 stakeholders from government, industry, academia and non-profit organisations. Two stand out for apparel suppliers:

• Extended producer responsibility for textiles, which would make companies responsible for what happens to products after use, alongside other requirements.
• Tax credits linked to textile circularity, designed to "reduce or offset the amount of taxes paid by businesses" when they take steps such as reusing textiles or reducing textile waste.

GAO also frames the wider commercial case. A shift towards circularity in textiles, it said, could support new jobs and markets linked to repair and recycling, help reduce environmental harm, and influence consumer practices.

Why the US lacks the infrastructure

The hurdles stakeholders flagged are structural rather than conceptual. GAO said stakeholders pointed to the absence of nationwide systems and facilities to collect and process textiles, alongside funding limitations.

In other words, even if brands commit to take-back or recycled-content targets, the collection and sorting capacity to feed a circular system doesn't yet exist at national scale in the US. That gap is the infrastructure question any EPR programme would ultimately have to fund.

Federal or state-led — where does the industry stand?

The 49 stakeholders interviewed for the review split on whether action should be led federally or left to states. Several, including industry groups, said they would prefer a federal approach, arguing it could support coordination, compliance and consistent implementation across states. They also said a single national framework would help businesses navigate other countries' legal requirements — a pointed argument for multinationals already contending with the EU's textile EPR rules.

GAO tempered that preference with a caveat. A nationally led model, it added, would still require additional coordination and resources, and would depend on the federal government's legal authority to put such an approach in place.

How the evidence was gathered

The review drew on legislation, regulations, federal agency documents and academic research, plus the 49 stakeholder interviews. For its evidence-gathering, the agency conducted site visits in Washington and Oregon and travelled to France and the Netherlands, where it met private-sector organisations involved in various aspects of textile circularity.

The scope matters for suppliers. GAO defines textiles to include apparel as well as products such as carpets, footwear and towels, and links the policy discussion to rising levels of textile consumption and waste globally. Footwear brands and home-textiles producers sit inside this agenda alongside fashion.

What sourcing teams should watch next

The report was produced after the agency was asked to examine how a textile circular economy could be developed in the US. For sourcing and compliance teams, the decision it forces is preparation: EPR obligations at state level are already moving, the EU's regime is live in parallel, and GAO has now put tax incentives and federal coordination on the record as credible policy directions.

Brands sourcing into the US market should map their product lines against GAO's textile definition, track state-level EPR bills, and budget for the collection and processing costs that any of these options would eventually shift upstream to producers.