Entity Setup
Entity Guidance: Reporting Car Loan Interest Under OBBB for Businesses
Businesses that lend or finance auto loans under the OBBB have new reporting obligations for 2025, and the IRS has issued transitional relief—key for lenders and dealerships.
By NomadicTax Research Team • 6 min read • November 23, 2025
The One, Big, Beautiful Bill (OBBB) requires businesses to report **car loan interest received** starting with amounts accruing in tax year 2025. This new requirement introduces compliance issues for lenders, auto dealers, credit unions and others. The IRS has released guidance via Notice 2025-57 to assist with the transition.
## What Changed Under the OBBB for Car Loan Interest
The OBBB adds a requirement for businesses (lenders or others who receive interest) to **report interest amounts on qualifying vehicle loans** for new vehicles assembled in the U.S.—when certain thresholds are met—for tax year 2025. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Relief & Guidance Provided
Recognizing that many entities might not yet have systems in place, the IRS/Treasury issued **transitional guidance including penalty relief** for tax year 2025 under Notice 2025-57. This relief reduces the risk of penalties for failing to report correctly during the first year. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Who Needs to Report & What Exactly
Entities that must comply include:
- Auto manufacturers, finance companies, or lenders that provide loans for qualifying new vehicles assembled in the U.S. under OBBB criteria.
- Interest received above $600 on such loans triggers reportable status.
- The reporting must be made to the IRS—and statements to the payee.
## Strategies to Meet Upcoming Deadlines
- Begin auditing whether your current loan financing setup covers “new assembled in the U.S.” vehicles; know which interest qualifies.
- Update systems to capture both payee identity, vehicle qualifying details, and distinguish interest vs principal.
- Work with vendors/software providers to ensure your accounting software can generate required reports/statements.
- Document efforts during this transition year to show good faith compliance—especially if relying on penalty relief.
## Hypothetical Example
Let’s say AutoFin, a lender, loans $30,000 on a qualifying new U.S.-assembled vehicle. The interest accrued in 2025 is $1,000. AutoFin must report that interest received and provide the payee with a statement—unless low enough to fall under a de minimis exception (which as of now is anything over $600 interest). But because 2025 is the transition year, provided AutoFin files otherwise complete and correct statements, they are protected from penalties under Notice 2025-57 for any missing occupation code or mismatched categorizations.
**Bottom line**: If you are in business and deal with auto loans for qualifying vehicles, start building your reporting pipeline now—but understand the protection available in 2025 under notice guidance.