IRS Provides Transitional Guidance for Reporting Car Loan Interest in 2025

If you recently financed a new vehicle—or you’re a lender who provides car loans—there’s new tax guidance you need to know about. The IRS just released simplified reporting rules for 2025 through Notice 2025-57 PDF that could affect your tax deductions and compliance requirements.

What’s the New Deduction?

Under the One Big Beautiful Bill Act (OBBBA), individuals can now deduct up to $10,000 in interest paid on qualified car loans for vehicles purchased between January 1, 2025, and December 31, 2028. This applies to personal-use vehicles that meet these criteria:

• Cars, minivans, SUVs, pickup trucks, or motorcycles
• Weigh less than 14,000 pounds
• Assembled in the United States
• Purchased with a loan taken out after December 31, 2024

What Does This Mean for Lenders?

If your business receives $600 or more in interest payments on these qualified vehicle loans during the year, you’re required to report that information to both the IRS and the borrower.

The Good News: Simplified Reporting for 2025

The IRS is making things easier this year. Instead of complex formal reporting, lenders can meet their 2025 requirements by simply making the total interest amount available to borrowers by January 31, 2026 through:

• An online customer portal
• Monthly statements
• An annual summary statement
• Any similar method that provides accurate information

Better yet, the IRS won’t impose penalties on lenders who follow these simplified guidelines, even if they don’t file traditional information returns for 2025.

What Should You Do Next?

Whether you’re claiming this deduction or you’re a lender navigating these new reporting requirements, the details matter. One misstep could mean leaving money on the table or facing unexpected compliance issues.

Partner with Advisors Who Understand Your Industry

At HBK CPAs & Consultants, we don’t just explain the rules—we help you apply them strategically to your specific situation. Our team stays on top of evolving tax guidance so you can focus on running your business with confidence. From maximizing deductions to ensuring seamless compliance, we provide the tailored expertise you need to thrive in your industry.

Schedule your consultation today to discuss how this new guidance affects your business and discover what other opportunities you might be missing.