One Big Beautiful Bill update on reporting car loan interest

The US Department of the Treasury and the IRS recently 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 Bill.

Transition relief for 2025

Notice 2025-57 provides transitional relief for 2025 for lenders and other interest recipients who are required to file information returns with the IRS and provide statements to borrowers showing the total amount of interest received on qualified passenger vehicle loans and other information related to the loan.

A qualified passenger vehicle is a car, minivan, van, SUV, pick-up truck, or motorcycle with a gross vehicle weight rating of less than 14,000 pounds and that has undergone final assembly in the United States.

Under the new 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.

No tax on car loan interest

This new tax benefit allows certain taxpayers to deduct interest paid on a qualified passenger vehicle loan during a taxable year beginning after December 31, 2024, and before January 1, 2029, provided the loan is incurred after December 31, 2024, and the vehicle is purchased for personal use.

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. Statistics show that sales of all new passenger cars in the U.S. totaled approximately 2.4 million last year and over 80% of those car sales were financed, often at the dealership.

For more information, refer to the One, Big, Beautiful Bill provisions page on IRS.gov.

Source: IRS