Learn the new rules for 1099 and vehicle loan interest reporting in the new tax law and what’s required of lenders.
The new tax law known as the One Big Beautiful Bill Act includes some provisions that may affect future reporting for financial institutions. Learn some of the new reporting rules.
Vehicle loan interest reporting
A new rule allows borrowers to deduct interest paid on a loan for a qualified vehicle. The maximum annual deduction is $10,000 and the deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).
To qualify for the deduction, the interest must meet the following requirements:
- Loan originated after December 31, 2024 (including subsequent loan refinancings)
- Used to purchase a new vehicle (used vehicles do not qualify)
- For a personal use vehicle (not for business or commercial use)
- Secured by a lien on the vehicle
A qualified vehicle is a car, minivan, SUV, pick-up truck, or motorcycle with gross vehicle weight rating of less than 14,000 pounds and that has undergone final assembly in the United States. Final assembly is listed on the vehicle information label attached to each vehicle or can be verified by entering the vehicle identification number (VIN) on the National Highway Traffic Safety Administration website.
What lenders are required to do
Lenders of qualified interest must file information returns with the IRS and provide statements to taxpayers showing the total amount of interest received (for those with interest aggregating $600 or more) during the tax year.
Filings must be completed by January 31 of the following year. Information filed includes:
- Name and address of the individual
- Amount of interest for the calendar year
- Amount of outstanding principal on the loan as of the beginning of calendar year
- Date of origination of loan
- Year, make, model, and VIN of the applicable passenger vehicle which secured the loan
Transitional guidance for 2025 vehicle loan reporting
The IRS and U.S. Treasury recently issued transitional guidance and penalty relief for 2025 for lenders required to report qualified vehicle loan interest under the One Big Beautiful Bill Act.
The IRS will consider that lenders have met their reporting obligations for interest received on a qualified vehicle if they make a statement available to the buyer indicating the total amount of interest received in calendar year 2025 on or before January 31, 2026 via one of the following communication methods:
- 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.
The IRS won’t impose penalties on lenders for failure to file information returns and provide payee statements if they satisfy their reporting obligations as described in the notice.
The IRS hasn’t issued an information reporting form for lenders to report 2025 interest paid by individual borrowers. Although the IRS has issued a draft of Form 1098-VLI, it’s scheduled for official release next year to report interest paid in the 2026 calendar year.
1099 reporting
1099 reporting also has changed under the new tax law. Reporting thresholds for 2025 remain the same. However, in 2026 the threshold for 1099-MISC and 1099-NEC will increase from $600 to $2,000. This threshold will also be indexed for inflation for 2027 and subsequent years.
How CLA can help with financial institution reporting requirements
CLA’s financial services professionals have significant experience helping lenders with reporting requirements — both new and longstanding. Reach out if you have additional questions regarding these reporting requirements. Also, explore more impacts of the new tax law on financial institutions.