Ships operating in U.S. waters face a stack of taxes rather than a single one. At the federal level, a tonnage duty of 2 to 6 cents per net ton applies each time a vessel enters from a foreign port, the Harbor Maintenance Fee adds 0.125% of the value of commercial cargo, and commercial vessels on designated inland waterways pay 29.1 cents per gallon on fuel. States layer on sales or use tax at purchase and, in many places, annual personal property tax. Some of that cost is recoverable through federal income tax deductions if the vessel qualifies. The taxes on ships work together, and knowing how each is triggered is what keeps an owner out of penalty territory.
Federal Tonnage Duty at Entry
Every vessel entering a U.S. port from a foreign location owes a tonnage duty based on its net tonnage, the measure of the ship’s usable internal volume. The rate depends on where the ship came from. Vessels arriving from North America, Central America, the West Indies, the Bahamas, Bermuda, or the Caribbean coast of South America pay 2 cents per net ton at each entry, capped at 10 cents per net ton per year. Vessels arriving from anywhere else pay 6 cents per net ton per entry, capped at 30 cents per net ton per year.1Office of the Law Revision Counsel. 46 USC 60301 – Regular Tonnage Taxes
Once the yearly cap is hit, no more regular tonnage duty is owed for the rest of the year, though the duty is still assessed at each entry until that point. A vessel entering by land from a foreign port that does not impose similar taxes on U.S. ships is exempt entirely under a reciprocity rule.1Office of the Law Revision Counsel. 46 USC 60301 – Regular Tonnage Taxes
Special Tonnage Taxes
Separate from the regular duty, certain vessels owe an additional special tonnage tax at each entry. A U.S.-built vessel partly owned by foreign nationals owes 30 cents per net ton. Other non-U.S. vessels pay 50 cents per net ton, as do U.S. vessels with any non-citizen officer. The highest rate, $2 per net ton, applies to foreign vessels arriving from ports that generally bar U.S. ships from trading.2Office of the Law Revision Counsel. 46 USC 60302 – Special Tonnage Taxes
When Tonnage Duty Doesn’t Apply
A vessel entering a U.S. port because it is in distress is exempt from both tonnage taxes and light money.3Office of the Law Revision Counsel. 46 USC 60305 – Tonnage Tax Exemptions The regular tonnage duty also does not apply to U.S. vessels, recreational vessels, or barges returning to the same U.S. port they departed from without having entered another country.1Office of the Law Revision Counsel. 46 USC 60301 – Regular Tonnage Taxes Recreational and domestic owners generally will not see this federal charge at all.
Harbor Maintenance Fee on Cargo
The Harbor Maintenance Fee is a federal charge on commercial cargo, not on the ship itself. It equals 0.125% of the value of commercial cargo loaded or unloaded at U.S. ports.4Office of the Law Revision Counsel. 26 USC 4461 – Imposition of Tax The revenue goes into the Harbor Maintenance Trust Fund, which pays primarily for dredging navigation channels along the coasts and Great Lakes.5Congress.gov. Distribution of Harbor Maintenance Trust Fund Expenditures
Bunker fuel, ship’s stores, and equipment used to operate the vessel do not count as commercial cargo, and fish or seafood not yet landed on shore is excluded. Ferries that primarily carry passengers and their vehicles between U.S. points or to neighboring countries are excluded from the definition of “commercial vessel,” provided they run on a regular schedule of at least once per business day.6Office of the Law Revision Counsel. 26 USC 4462 – Definitions and Special Rules
Cargo shipped between the U.S. mainland and Alaska, Hawaii, or U.S. possessions for consumption in those locations is exempt, as is cargo moving among Alaska, Hawaii, and U.S. possessions. Crude oil shipped from Alaska is the notable exception and remains subject to the fee.6Office of the Law Revision Counsel. 26 USC 4462 – Definitions and Special Rules
Inland Waterways Fuel Tax
Commercial vessels operating on designated inland and intracoastal waterways pay a federal fuel tax of 29.1 cents per gallon. Of that, 29 cents funds the Inland Waterways Trust Fund and 0.1 cent funds the Leaking Underground Storage Tank Trust Fund.7Office of the Law Revision Counsel. 26 USC 4042 – Tax on Fuel Used in Commercial Transportation on Inland Waterways It applies only to fuel burned in commercial transportation on the specific waterways designated by the Inland Waterways Revenue Act of 1978. Recreational boaters and vessels operating on open ocean routes are not subject to it. For barge and towboat operators on major river systems, the fuel tax is a recurring cost that flows into shipping rates.
State Sales and Use Tax at Purchase
Buying a vessel triggers state sales tax, with rates that generally fall between 3% and 8% of the purchase price. A handful of states cap the total tax dollar amount regardless of vessel value. That cap matters on higher-priced boats: at 6% with no cap, a million-dollar yacht carries $60,000 in tax; a state that caps the tax at $20,000 stops there. Checking for a cap before purchase can change the math significantly.
Use tax is the backstop. Buy in one state and bring the vessel to another, and the home state charges use tax on the purchase to prevent border-hopping. Most states credit sales tax already paid elsewhere, so the practical liability is often just the difference between the two rates. Grace periods before use tax attaches vary, with many states allowing something in the range of 45 to 90 days of presence before treating the vessel as located there. Owners who split time across states should track their days; exceeding the grace period exposes the full purchase price to the use tax rate. Some states offer temporary-use permits that let a vessel operate for a set period without triggering permanent liability.
Annual Personal Property Tax
Many jurisdictions treat vessels as taxable personal property and assess an annual ad valorem tax on current market value rather than original price. Assessors look at age, length, and condition each year. Depreciation generally lowers the assessed value over time, though significant upgrades can push it back up.
Situs, meaning where the vessel is functionally located, drives the property tax question. A boat that spends most of the calendar year at a particular marina falls under that county or municipality’s taxing authority. A common threshold is 184 days or more of cumulative presence during the year. Two jurisdictions claiming the same boat is a problem worth preventing with detailed docking logs.
Assessment deadlines are strict and vary by locality, with many falling in the first few months of the year. Missing the deadline commonly triggers a penalty of around 10% of the tax owed. Ownership is typically fixed as of January 1, so a vessel sold in February can still generate a full-year property tax bill unless the assessor’s office is notified.
Income Tax Deductions That Offset the Cost
Two federal income tax provisions can offset some of what an owner pays out. Each has conditions.
Mortgage Interest on a Qualifying Boat
The IRS treats a boat as a qualified second home for the mortgage interest deduction if it has sleeping, cooking, and toilet facilities. If the boat qualifies and the purchase was financed with a secured loan, the mortgage interest is deductible on the federal return the same way it would be for a vacation home. The boat does not have to be a primary residence, and if it is not rented out at all during the year, there is no minimum personal-use requirement.8Internal Revenue Service. Publication 936 – Home Mortgage Interest Deduction
Renting the boat out changes the picture. Personal use must exceed 14 days or 10% of the days it was rented at fair market rates, whichever is longer. Fall short and the IRS reclassifies the boat as rental property, which ends the second-home interest deduction.8Internal Revenue Service. Publication 936 – Home Mortgage Interest Deduction
Depreciation for Business-Use Vessels
Vessels used primarily for business, such as charter boats or commercial fishing vessels, may qualify for accelerated depreciation, including Section 179 expensing. Business use must exceed 50%; recreational use does not count. The Section 179 deduction limit for 2025 was $1,250,000, and bonus depreciation rules can accelerate the write-off further. Because these provisions change often, checking the current year’s rules with a tax professional before relying on a particular schedule is worth the cost.
Paperwork at Entry
Federal tonnage obligations are processed through specific Customs and Border Protection forms. CBP Form 1300 is the primary vessel entrance and clearance document. It records the ship’s name, nationality, gross and net tonnage, port of origin, cargo description, and crew count.9U.S. Customs and Border Protection. CBP Form 1300 – Vessel Entrance or Clearance Statement CBP Form 1002 is the official receipt for payment of regular tonnage taxes, special tonnage taxes, and light money.10Federal Register. Tonnage Tax Modernization
Gross and net tonnage on the forms must match the vessel’s official measurement certificates. A mismatch can delay processing or prompt review. A bill of sale establishes the cost basis for state sales tax, and port entry records help document how long the vessel has been in a given jurisdiction for use tax and property tax purposes. Organized records save time from initial entry through annual filings.