The IRS recently issued new guidance (FS-2025-03, July 14, 2025) on the “One Big Beautiful Bill Act” (OBBBA), which affects how financial institutions, auto lenders, and servicers report interest on personal auto loans. These updates provide some relief for 2025 and clarify how to determine if a vehicle qualifies as assembled in the United States.
Who’s Affected and Reporting Requirements
Starting in 2025, individuals may deduct interest on certain personal auto loans (up to $10,000 annually) under IRC Section 163(h). To support these deductions, lenders must:
- Report interest received of $600 or more per year to the IRS.
- Provide statements to borrowers showing total interest received.
This reporting is required even if the borrower’s deduction is limited or phased out based on income.
Transition Relief for Lenders
The IRS is offering transition relief for 2025 for lenders subject to these new requirements. Full guidance is still forthcoming, but institutions should begin preparing now to comply with the rules.
Determination of Domestic Assembly
To comply with reporting requirements, lenders must confirm whether a financed vehicle was finally assembled in the United States. Two methods are approved:
- Vehicle Information Label – Found on the car at the dealer’s location.
- Vehicle Identification Number (VIN) – Use the National Highway Traffic Safety Administration’s VIN Decoder. The first digit indicates the country of manufacture: 1, 4, or 5 signifies the United States.
Need Additional Help?
These new reporting rules can be complex, but you don’t have to navigate them alone. Contact a Pinion financial institutions advisor to interpret the guidance, ensure compliance, and understand how these changes may affect your institution.
