Updated November 7, 2026. Quick answer: The early-release draft of the 2026 Schedule E (Form 1040) changes the interest block of Part I. Line 13 is now headed Interest, with new line 13a for vehicle loan interest and line 13b for other interest, where the 2025 form had a single line 13, Other interest. Because the form grows by a page, its cross-references to the Part V summary now point to page 3 instead of page 2. The draft instructions add a 72.5 cent and 76 cent mileage rate, a permanent 100% special depreciation allowance and a limit on gambling losses.
The interest block in Part I
| Line | 2025 form | 2026 draft |
|---|---|---|
| 12 | Mortgage interest paid to banks, etc. (see instructions) | Mortgage interest paid to banks, etc. (see instructions) |
| 13 | Other interest | Interest (see instructions) |
| 13a | No such line | Vehicle loan |
| 13b | No such line | Other |
The draft instructions say: “Use line 13a to report the business-use portion of your vehicle loan interest.” A reminder in the same document reads “You can only deduct the part of the interest expense that represents the business use of your vehicle on Schedule E (Form 1040).”
Other changes the draft instructions list
- “For January 1, 2026, through June 30, 2026, the rate is 72.5 cents a mile. For July 1, 2026, through December 31, 2026, the rate is 76 cents a mile.”
- “The 100% special depreciation allowance is now permanent for qualified property acquired and placed in service after January 19, 2025.”
- “Part VI of Form 4562 has been moved to new Form 4562-B, Amortization, to report deductions for amortization of intangible assets.”
- “Beginning in 2026, your gambling losses are limited to 90% of total gambling losses for the year.”
- “The QBI deduction has been made permanent for tax years beginning after 2025.”
- “The information reporting threshold increased from $600 to $2,000 for certain payments made on or after January 1, 2026.”
Page references on the form
Where the 2025 form says “rental income or loss from Form 4835 on page 2, line 40.” the draft says “rental income or loss from Form 4835 on page 3, line 40.” The same shift appears in the instruction for line 26, where the total goes “include this amount in the total on line 41 on page 3”.
What this page cannot tell you
- The draft has not been through OMB approval; the IRS cover sheet says “Do not file draft forms.” Check the final form before you file.
- This page lists the changes that alter a line’s meaning or number. It does not list the property address block on page 1, which on the draft has separate fields for number and street, apartment number, city or town, state and ZIP code, or the lower-casing of labels such as Type of property and Passive income and loss.
- Whether an expense is deductible on Schedule E is decided by the instructions and the law, not by this summary.
Edition
This page compares the IRS early-release draft of the 2026 Schedule E (Form 1040, created May 6, 2026) and its draft instructions with the 2025 Schedule E final, retrieved on November 7, 2026. The 2026 documents are early-release drafts. The IRS says of such drafts: “We incorporate all significant changes to forms posted with this coversheet.” A draft can still be replaced before the final form is released, so check the final form before you rely on a line number.
Common mistakes
- Entering all interest on line 13 of a 2026 draft. Line 13 is now a heading; the amounts go on 13a and 13b.
- Claiming vehicle loan interest on Schedule E for personal use of the vehicle. The draft instructions limit Schedule E to the business-use part.
- Looking for the Part V summary on page 2. The draft puts it on page 3.
Related: Schedule E (Form 1040), Schedule E lines 12 to 19, and standard mileage rate 2026.
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Answer againSources
- IRS draft Schedule E (Form 1040) for tax year 2026 (early release draft, irs.gov/pub/irs-dft): irs.gov (PDF)
- IRS draft Instructions for Schedule E (Form 1040) for tax year 2026 (early release draft, irs.gov/pub/irs-dft): irs.gov (PDF)
- IRS Schedule E (Form 1040) for tax year 2025 (final, irs.gov/pub/irs-prior): irs.gov (PDF)
Read from the documents linked above on November 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.