Sponsors (3)
The bill treats financed recreational boats more like vehicles—easing reporting and allowing interest deductions for borrowers—while raising the risk of lost tax revenue and imposing compliance and administrative costs for lenders and some taxpayers.
Lenders, dealers, and boat buyers: updates reporting to accept hull identification numbers (HINs), making registration and financing paperwork for boats more consistent with vehicles and simplifying compliance for lenders and purchasers.
Boat purchasers who finance recreational motorboats: qualified interest on financing for eligible watercraft can be deducted similarly to vehicle interest for indebtedness incurred after Dec 31, 2025, potentially lowering after-tax borrowing costs for those buyers.
All taxpayers/the federal budget: extending interest deductions to more watercraft could reduce federal tax revenue and increase the deficit or require offsets elsewhere in the budget.
Boat owners and taxpayers: the carve-out may create disputes or uncertainty over whether a craft meets the statutory definitions of motorboat or recreational vessel, increasing compliance risk and potential audits or litigation.
Small lenders and payors: will likely incur administrative and IT costs to update systems to capture and report HINs alongside VINs and to implement the new reporting rules.
Based on analysis of 2 sections of legislative text.
Expands the passenger-vehicle interest rules to include certain recreational motorboats and allows reporting by hull identification number.
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
Expands the tax rule that limits deductibility of interest on "applicable passenger vehicles" to also include certain recreational motorboats, allowing interest on qualifying boat loans to be treated like qualified vehicle loan interest. It also updates reporting rules so lenders can report hull identification numbers (HINs) in addition to vehicle identification numbers (VINs). Changes apply to indebtedness incurred after December 31, 2025, and modify both the definition used in the interest limitation and the lender information-reporting requirement to accept a boat's HIN.