Compliance
Compliance Guide for Car Loan Interest Reporting Under OBBB
New reporting obligations under section 6050AA require lenders to collect, report, and share interest information on passenger vehicle loans made after December 31, 2024. Here's how to comply.
By NomadicTax Research Team • 5-8 min read • November 18, 2025
## Understanding §6050AA & Its Scope
When the OBBB (One, Big, Beautiful Bill) amended the Internal Revenue Code, it introduced § 6050AA. This requires **recipients of interest** (like lenders or dealers) who receive from individuals $600 or more in interest on a “specified passenger vehicle loan” during a calendar year to file information returns and furnish statements to the individuals. The loans must be:
- Incidental to a purchase made after December 31, 2024
- Secured by a first lien on a qualifying passenger vehicle (final assembly in the U.S., under a certain weight, used for personal use) ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
Those interest amounts may be deductible by taxpayers under §163(a) as Qualified Passenger Vehicle Loan Interest (QPVLI), effective 2025–2028. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
## Transitional Relief Provided by IRS
Notice 2025-57 offers relief for calendar year 2025:
- **Deadline flexibility:** Recipients can satisfy reporting obligations by providing a statement showing total interest received on specified passenger vehicle loans, by **January 31, 2026**. This can be via online portal, monthly or annual statement, or similar means. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **No penalties** for failing to file information returns or statements in 2025, provided recipients act in good faith and follow the transitional guidance. ([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))
## Practical Steps for Lenders, Dealers, and Payors
*Implement or update your system to:*
1. **Identify qualifying loans**: Track origination date, vehicle characteristics (VIN label or NHTSA data), weight, assembly location.
2. **Record interest amounts received from individuals**: Ensure your accounting collects interest paid for personal, not business, loans.
3. **Prepare payee statements** to include:
- Name & address of individual
- Total interest received in calendar year
- Loan origination date
- Outstanding principal at start of year
- Vehicle year, make, model, VIN or equivalent description. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
4. **Decide medium**: online portal, periodic statement, or annual statement depending on your processes.
5. **File information return** with IRS where required (for 2026 forward); for 2025 only statements are required and penalties waived. ([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))
## For Taxpayers (Individuals)
- **Retain statements** from lenders showing interest paid in 2025 to claim deduction as QPVLI.
- **Understand phase-outs**: Deduction phases out for MAGI over $100,000 (single) / $200,000 (MFJ) under OBBB rules. ([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions?utm_source=openai))
- **Verify that lenders make statements by January 31, 2026**, to avoid issues when filing 2025 return.
## Example Scenario
Sara buys a qualifying SUV on February 2025 under a loan that qualifies. She pays $1,200 in interest that year. Lender must provide a statement showing $1,200 by Jan 31, 2026. If Sara’s MAGI is $90,000, she can claim QPVLI deduction for up to $10,000, subject to phase-out rules. Also, lender must be ready by 2026 to file the IRS information return (if meets $600 threshold).
## Compliance Risk & Timelines
- **Missed statements or returns** can result in penalties under §6721/6722 for years after 2025.
- **Records**: Hold copies of statements/forms long enough (generally 3 years or more) in case of audit.
## Bottom Line
For lenders and individuals alike, early action in 2025 under transitional guidance will smooth the path for full compliance in 2026. Staying on top of reporting thresholds, deadlines, and the definition of “qualified” under the law will be key.