The IRS has provided transitional guidance for lenders on reporting interest received from qualified passenger vehicle loans and related information. The One Big Beautiful Bill Act added a new tax benefit for borrowers to deduct interest paid on qualified vehicles beginning in 2025.
Requirements and reporting guidelines:
A qualified vehicle is a car, minivan, van, SUV, pick-up truck, or motorcycle weighing less than 14,000 pounds that has undergone final assembly in the United States. The vehicle also must be used for personal use (does not apply for business use).
While the IRS has issued a sample 1098-VLI to report this interest if they receive $600 or more in interest from an individual, it is not required to be used for 2025 reporting.
The transitional guidance allows the lender to make a statement available to the buyer to indicate the total amount of interest received. Specifically, lenders can meet their reporting requirements by making this total amount of interest available by January 31, 2026, via:
- An online portal that the buyer can easily access
- A regular monthly statement
- An annual statement that is provided to the buyer; or
- Other similar means designed to provide accurate information to the buyer regarding interest received
- Information provided should include the annual interest paid, as well as the VIN number
The IRS will not impose penalties on lenders for failure to file information returns.
The full interim guidance can be found at Treasury, IRS provide transition relief for 2025 for businesses reporting car loan interest under the One, Big, Beautiful Bill | Internal Revenue Service.
Please reach out to your Pinion tax advisor to interpret the guidance, ensure compliance, and understand how these changes may affect your institution.
