The IRS and U.S. Treasury are granting temporary (transitional) relief to lenders and other businesses that must report car loan interest under the One, Big, Beautiful Bill (OBBB) for the 2025 tax year.
Under this relief:
- Simplified Reporting Requirement:
Lenders will be considered compliant with reporting obligations for 2025 if they simply make the total amount of interest received available to borrowers, rather than submitting full information returns to the IRS. - Acceptable Reporting Methods:
The total interest received may be disclosed to borrowers through any of the following:
- An online portal accessible to the borrower
- A regular monthly statement
- An annual statement provided to the borrower
- Any other comparable method that gives accurate information
- Penalty Relief:
The IRS will not impose penalties on lenders who fail to file information returns or provide payee statements, as long as they meet the simplified disclosure requirements listed above.
Who Qualifies
The relief applies to lenders and interest recipients who receive $600 or more in interest in 2025 on qualified passenger vehicle loans, which include:
- Cars, SUVs, minivans, vans, pickup trucks, or motorcycles
- Vehicles under 14,000 pounds gross vehicle weight
- Final assembly must occur in the United States
Background: The New OBBB Tax Benefit
The One, Big, Beautiful Bill (OBBB) allows taxpayers to deduct interest paid on qualified passenger vehicle loans taken out after December 31, 2024, and before January 1, 2029, if the vehicle is for personal use.
For 2025, businesses and lenders get transitional penalty relief—they won’t face fines if they provide borrowers with accurate interest information through standard statements or online access, instead of filing new IRS forms. This gives the industry time to adjust to the new OBBB reporting requirements.
If your business provides vehicle financing or receives car loan interest, now is the time to review your reporting processes. Stay compliant and ready for full implementation in 2026 by consulting a qualified bookkeeper or tax professional today.