Tax insight

IRS provides 2025 transitional guidance and relief for lenders reporting car loan interest

Insight
5 minute read
October 27, 2025

What happened?

The IRS on October 21 released Notice 2025-57 (the Notice), providing transitional guidance and penalty relief for commercial lenders in connection with new information reporting requirements under the One Big Beautiful Bill Act (the Act). The Notice specifically addresses how lenders should report vehicle loan interest (VLI) received in 2025 on car loans covered by the Act. On October 17, the IRS released draft Form 1098-VLI, Vehicle Loan Interest Statement, for commercial lenders to report VLI to borrowers and the IRS.

Why is it relevant? 

Beginning in 2025, commercial lenders that receive $600 or more in VHI from an individual on a specified passenger vehicle loan (SPVL) during a calendar year are subject to new information reporting requirements. The guidance clarifies how lenders can meet their obligations during the transition period and avoid penalties while adapting to the new regime.

Actions to consider 

Commercial lenders should review the Notice and draft Form 1098-VLI carefully and confirm that their reporting processes align with the modified requirements outlined in the guidance. Lenders also should continue updating their internal systems and procedures to comply with the Act’s information reporting requirements for 2025 and beyond.