Sponsors (2)
The bill extends vehicle-like interest-deduction treatment and modernizes reporting to include hull identification numbers—benefiting financed boat buyers and simplifying some reporting—while likely reducing tax revenue and imposing administrative and compliance costs on lenders and taxpayers.
Boat buyers who finance recreational motorboats can deduct qualified interest on that indebtedness (for loans originated after Dec 31, 2025), putting financed boats on parity with financed vehicles for interest deduction.
Lenders, boat buyers, and registrars get simpler, more accurate reporting because the rules explicitly accept hull identification numbers (HINs), reducing mismatches and easing compliance when VINs don't apply.
Allowing interest deductions for financed recreational watercraft expands the tax base of deductible interest and could reduce federal tax revenue, which may increase the deficit or require offsets.
Small lenders and payors will incur administrative and IT costs to update systems and procedures to capture and report HINs alongside VINs.
The carve-out for motorboats/recreational vessels may create disputes or uncertainty over whether a particular craft qualifies, increasing compliance risk and potential litigation or IRS challenges for taxpayers and sellers.
Based on analysis of 2 sections of legislative text.
Allows interest on loans for certain new recreational motorboats to qualify like passenger-vehicle acquisition indebtedness and permits HIN reporting.
Official title: To amend the Internal Revenue Code of 1986 to allow a deduction for loan interest payments made with respect to certain watercraft.
Introduced June 30, 2026 by Rudy Yakym · Last progress June 30, 2026
Treats certain qualifying recreational motorboats like passenger vehicles for the purpose of the tax deduction for interest on acquisition indebtedness. The bill adds an “applicable watercraft” definition to the existing definition of “applicable passenger vehicle,” allows taxpayers to claim interest deduction on loans for qualifying boats incurred after December 31, 2025, and updates reporting rules so lenders may report a hull identification number (HIN) in place of a vehicle identification number (VIN).