Tax Planning
Car Loan Interest Reporting Relief for 2025: Business Owners, Pay Attention!
OBBB introduces new reporting on car loan interest for 2025—but the IRS is giving transitional relief to ease the change for lenders and businesses.
By NomadicTax Research Team • 5-8 min read • November 16, 2025
## What is the new requirement under OBBB?
- The **One, Big, Beautiful Bill Act** added **section 6050AA** to the Internal Revenue Code, which mandates information reporting for interest received from individuals on **qualified passenger vehicle loans** if aggregate interest equals **$600 or more** in a calendar year. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- Also, OBBB amended **section 163(h)(4)** so certain passenger vehicle loan interest—which used to be considered “personal interest” and thus not deductible—can now be **deducted** for taxable years beginning after December 31, 2024 and before January 1, 2029. Qualifying criteria apply. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-transition-relief-for-2025-for-businesses-reporting-car-loan-interest-under-the-one-big-beautiful-bill?utm_source=openai))
## What relief is the IRS providing for 2025?
- For interest received in 2025, **recipients** (lenders or businesses) can satisfy reporting obligation by **making a statement available** to the individual from whom the interest was received by **January 31, 2026**. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- Acceptable means include an **online portal**, monthly or annual statements, or other similar methods. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Penalties under sections 6721 and 6722** (failures to file information returns / furnish payee statements) will **not be imposed** in 2025 if recipients follow the transitional guidance. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
## Why this matters to businesses and individuals
- Lenders must adjust systems and workflows to accommodate new reporting details: vehicle VIN, make/model/year, loan origination date, interest received, outstanding principal. All required under section 6050AA. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- Individuals may now **deduct qualified passenger vehicle loan interest** under section 163(a) for loans they take out for personal use (with qualifying requirements). This marks a change since personal interest was generally non-deductible. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-transition-relief-for-2025-for-businesses-reporting-car-loan-interest-under-the-one-big-beautiful-bill?utm_source=openai))
## Examples
- **Example 1**: Jane lends to a friend interest on a car loan of $650 for 2025. By January 31, 2026, she provides an annual statement showing the total interest received and other required info. No penalty under 6721/22.
- **Example 2**: Auto dealership finances a customer’s passenger SUV (gross-vehicle weight <14,000 lbs, assembled in US) and receives $1,200 interest in 2025. Must treat as qualified loan, report interest received and allow deductibility to the buyer. Dealer must also furnish required statement. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-transition-relief-for-2025-for-businesses-reporting-car-loan-interest-under-the-one-big-beautiful-bill?utm_source=openai))
## Actionable insights for affected parties
- **Lenders / vehicle finance companies**: update internal reporting systems, customer statements, and ensure your teams understand the new categories of “qualified passenger vehicle”.
- **Borrowers / vehicle buyers**: check loan documents; ensure vehicle meets the criteria; keep statements showing interest paid to support deduction.
- **Tax practitioners**: advise clients about potential deductions, and ensure correct reporting to avoid trouble in upcoming tax filings.