Qualified passenger vehicles include certain watercraft for purposes of deduction for interest paid or accrued

(a) In general Section 163(h)(4)(D) of the Internal Revenue Code of 1986 is amended to read as follows: (D) Applicable passenger vehicle For purposes of this paragraph— (i) In general The term applicable passenger vehicle means an applicable motor vehicle or an applicable watercraft. (ii) Applicable motor vehicle The term applicable motor vehicle means any vehicle— (I) the original use of which commences with the taxpayer, (II) which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails), (III) which has at least 2 wheels, (IV) which is a car, minivan, van, sport utility vehicle, pickup truck, or motorcycle, (V) which is treated as a motor vehicle for purposes of title II of the Clean Air Act, and (VI) which has a gross vehicle weight rating of less than 14,000 pounds. Such term shall not include any vehicle the final assembly of which did not occur within the United States. (iii) Applicable watercraft The term applicable watercraft means a watercraft— (I) the original use of which commences with the taxpayer, (II) which is a recreational vessel (as defined in section 2101 of title 46, United States Code), and (III) which is a motorboat (as defined in section 90.10–23 of title 46, Code of Federal Regulations, as in effect on the date of the enactment of this subparagraph). Such term shall not include any watercraft the final assembly of which did not occur in the United States.. (b) Conforming amendments Such Code is further amended— (1) in section 163(h)(4)(B)(iii)— (A) by striking VIN in the heading and inserting Identification number, and (B) by striking the vehicle identification number of the applicable passenger vehicle described in clause (i) on the return of tax for the taxable year. and inserting on the return of tax for the taxable year— (I) the vehicle identification number in the case of an applicable motor vehicle, or (J) the hull identification number in the case of an applicable watercraft., and (2) in section 6050AA(b)(2)(E), by striking vehicle identification number and inserting vehicle or hull identification number. (c) Effective date The amendments made by this section shall apply to indebtedness incurred after December 31, 2025.