The IRS has released Notice 2025-57, announcing transitional relief for both lenders and borrowers under the new below-the-line, non-itemized car-loan interest deduction introduced by the One Big Beautiful Bill Act (OBBBA).
This guidance coincides with the IRS’s issuance of draft Form 1098-VLI (Vehicle Loan Interest Statement) on October 17 2025, establishing a framework for future information reporting similar to the existing mortgage-interest reporting regime. This reporting requirement mirrors Form 1098 (Mortgage Interest Statement) obligations for home-loan interest.
Under OBBBA, lenders must report qualifying vehicle-loan interest paid by borrowers when the total interest received during the calendar year equals or exceeds $600.
The new Form 1098-VLI must be:
Because Form 1098-VLI remains in draft status, the IRS has designated 2025 as a transition year. Lenders will be deemed compliant if they make available to borrowers a statement reflecting total interest paid in 2025 on any qualified passenger-car loan.
Acceptable delivery methods include:
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.
For 2025 returns, borrowers may rely on the lender-provided statement when claiming the OBBBA car-loan interest deduction—even in the absence of Form 1098-VLI.
In future years, once finalized, Form 1098-VLI will become the standard reporting document for vehicle-loan interest reporting.
While Notice 2025-57 offers flexibility for 2025, lenders should begin adapting their systems and compliance procedures now to accommodate full reporting by 2026.
Borrowers should retain all 2025 lender statements as substantiation for any claimed deductions.