U.S. Lawmakers Push Bill to Cut Taxes on Recreational Boat Loans

A new piece of federal legislation introduced in the U.S. House of Representatives this month could reshape the economics of recreational boat ownership across the U.S.

South Carolina Republican Representative Nancy Mace unveiled the No Tax on Boat Loan Interest Act of 2026 (H.R.7222) on January 26th, a bill designed to extend a tax deduction for loan interest to qualifying recreational boats that are assembled in the United States.

If passed, the law would allow individual taxpayers to deduct up to $10,000 a year in interest paid on boat loans. Supporters of the bill say it's intended to make boats more affordable for middle-class consumers and strengthen the domestic marine industry and economy at large.

Under current U.S. tax law, interest paid on some personal loans can be deductible in specific circumstances, like mortgages on homes or, more recently, interest on loans for American-made vehicles under provisions of the One Big Beautiful Bill Act. The new legislation would amend the Internal Revenue Code to include recreational boats in that tax segment, provided they meet certain thresholds. Qualifying vessels would have to meet these criteria:

• First used by the purchaser

• Classified as recreational under federal law

• Defined as a motorboat by U.S. Coast Guard regulations

• Assembled in the United States

Taxpayers would then be required to include the boat’s hull identification number on their tax returns, and the deduction would phase out for those with a modified adjusted gross income above $100,000 ($200,000 for joint filers such as dual income spouses, etc). The deduction would be available through 2028 if the bill becomes law.

If the bill were enacted in its current form, it would reduce the tax burden on interest paid over the life of a boat which, in turn, would encourage more consumers to enter the market. The recreational boating industry supports over 812,000 jobs nationwide and contributes approximately $230 billion in economic activity to the U.S. every year.

The National Marine Manufacturers Association (NMMA) rallied behind the bill, with President and CEO Frank Hugelmeyer saying the measure “recognizes the vital economic role recreational boating plays across American communities,” further stressing that “95 % of boats sold in the U.S. are built here at home, and the vast majority by small businesses.”

The NMMA, and industry stakeholders overall, view the bill as a way to project jobs in the marine industry, support domestic manufacturing within the U.S., and make boating more affordable and accessible for a larger segment of the population currently dealing with rising costs overall. The Marine Retailers Association of the Americas (MRAA) also applauded the bill, stating that expanding the tax break could provide financial relief to boat buyers and stimulate sales at the local level. Matt Gruhn, President of the Marine Retailers Association of the Americas (MRAA), said: "(t)he provisions put forth in this bill will expand the 'No Tax on Car Loan Interest' provision included in the recently passed One Big Beautiful Bill Act to American-made recreational boats. This change will provide needed relief to hardworking Americans who support our nation's recreational boating industry by allowing them to deduct interest paid on loans used to buy American-made watercraft. With the majority of boat owners in America making less than $100,000 a year, this bill stands to significantly benefit working-class Americans and help encourage more folks to get on the water to the benefit of their health and the recreational boating industry at large."

For U.S. boat builders, dealers, and financial lenders, the legislation could represent more than just a tax break — it may could also influence purchasing power. Average consumer boat loans often exceed tens of thousands of dollars, with interest costs that can substantially increase the total cost of ownership. Allowing borrowers to deduct up to $10,000 in interest each year effectively reduces their after-tax financing cost, which is particularly helpful for middle-income boaters.

"South Carolina's boating industry is the backbone of our coastal economy," Mace said in a statement as the representative for South Carolina's 1st Congressional District. "This legislation ensures American-made recreational boats are treated fairly under the tax code, supporting the thousands of South Carolina families whose livelihoods depend on marine manufacturing and services. It's about protecting good-paying jobs in our coastal communities and providing tax relief to the hardworking South Carolina families who power our state's economy."

According to Mace and industry advocates, the introduction of H.R.7222 is intended to provide relief to the recreational boating market as it continues to face economic pressures. Softness in new powerboat sales has been trending, with the decline in retail numbers largely attributed to high interest rates and broader economic uncertainty. The increase in financing costs is a central conversation among boaters who often describe it as a deterrent for their discretionary spending.

Domestic manufacturers could also stand to benefit from increased demand for American-built boats. Nearly all boats sold in the U.S. are manufactured domestically, which makes for a mutually beneficial dynamic between manufacturers, boaters, and the U.S. economy overall. With a similar composition to the U.S. automotive market, increasing the number of recreational boats sold domestically would have trickle down benefits both inside and outside the marine industry.

While the No Tax on Boat Loan Interest Act has support from industry stakeholders, its passage is not guaranteed. The bill is now set to enter the U.S. legislative process, which includes committee review before it must be approval by both the House and Senate before reaching the president’s desk to be signed into law. There is no concrete timeline for its passage.

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