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Today the Department of the Treasury and the Internal Revenue Service provided transitional guidance for businesses required to report car loan interest under the One, Big, Beautiful Bill. Notice 2025-57 provides penalty relief and guidance to certain lenders for new information reporting requirements for car loan interest received in 2025 under the OBBB.
Under this guidance, the IRS will consider that lenders have met their reporting obligations for interest received on a qualified passenger car loan in 2025 if they make a statement available to the buyer indicating the total amount of interest received. Specifically, lenders can meet their reporting requirements by making this total amount of interest available:
- On an online portal that the buyer can easily access;
- In a regular monthly statement;
- On an annual statement that is provided to the buyer; or
- By other similar means designed to provide accurate information to the buyer regarding interest received.
In addition, the IRS will not impose penalties on lenders for a failure to file information returns and provide payee statements if they satisfy their reporting obligations as described in the Notice.
The Law under the OBBBA
Taxpayer / Individual
Taxpayers, whether they itemize or not, are permitted an auto loan interest deduction for qualified interest on a qualified vehicle. Deduction is limited to $10k and phases out at a 20% rate when for every $1,000 > $100k ($200k if MFJ). Taxpayer must provide VIN. The interest must be on a loan originated after December 31, 2024, for a personal use vehicle. The vehicle can be a car, minivan, van, SUV, pick-up truck or motorcycle, with a gross vehicle weight rating of < 14,000 pounds, and that has undergone final assembly in the United states.
Business
While individuals benefit from a new deduction, businesses and lenders face updated reporting rules. Information reporting will be required for lenders who receive interest of at least $600. Businesses that receive from any individual interest of $600 or more for any calendar year on a qualified passenger vehicle loan must comply with the new reporting requirements.
This aligns car-loan reporting with the existing Form 1098 mortgage-interest framework.
Conclusion
Notice 2025-57 gives lenders transitional relief from penalties as they adapt to new 2025 reporting rules for car-loan interest. At the same time, individuals may claim a deduction of up to $10,000 of interest on qualifying personal-vehicle loans — available whether or not they itemize. Both provisions aim to streamline reporting and expand tax relief under the One, Big, Beautiful Bill Act.
Statistics show that sales of all new passenger cars in the U.S. totaled ~2.4m last year and over 80% of those car sales were financed, often at the dealership.
Disclaimer: The information provided herein is intended solely for informational purposes and no person(s) or other third-party may rely upon it as financial, tax, or legal advice or use it for any other purposes. As a result, Royal Financial, and any affiliates, assume no responsibility whatsoever to readers, or any other persons for that matter, as a result of the information contained herein.