This bill would change the tax code so that certain watercraft count the same as passenger vehicles for the purpose of deducting interest. It adds a new definition, "applicable watercraft," which must be a recreational vessel (per 46 U.S.C. 2101), a motorboat (per 46 C.F.R. 90.10-23 as of the bill's enactment), and must have its original use start with the taxpayer. The bill also says the watercraft's final assembly must occur in the United States. The bill updates tax return reporting rules to require a hull identification number for qualifying watercraft and makes related technical changes. The rule would apply to debt incurred after December 31, 2025. The bill was introduced June 30, 2026, and referred to the House Committee on Ways and Means.
If this bill becomes law and you take out a loan after December 31, 2025, you may be able to deduct interest paid on that loan for a qualifying recreational motorboat. To qualify, the boat must meet the specific legal definitions named in the bill, its original use must begin with you, and its final assembly must have taken place in the United States. You would need to report the boat's hull identification number on your tax return when claiming the deduction.
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