You need a knife now. Drag the knife onto the shirt and you will see the "tear into rags" option

A worse design call here.

If you'd like to tear your shirt apart IRL you can easly do that without the help of a sharp tool.

I hope this changes back to what it was.

However, I'd be ok if you could tear pants of any kind into rags with a sharp tool, that would be something though.

I totally agree. I can easily tear fabrics with my hands. it would be cool if t-shirts and hoodies could be teared by hand and jeans ect with knifes..

Hello TheLynxDr.
Due to recent changes to the game, a knife or sharp weapon is required to receive rags from piece of clothing. This may change in future stages of development.
Regards,
Geez