The Internal Revenue Service on Tuesday told auto lenders what they need to do to comply with the new interest reporting requirement for 2025 vehicle purchases.
The tax change is part of the One Big Beautiful Bill Act (OBBBA) signed into law on July 4, but it retroactively covers car loans to Jan. 1.
IRS Notice 2025-57 says businesses that receive from any individual interest of $600 or more on a qualified passenger vehicle loan must comply with the new reporting requirements using an easily accessible online portal, a monthly or annual statement, or "by similar means designed to provide accurate information to the buyer,” the IRS said.
Taxpayers can claim up to $10,000 in interest for a new personal car, minivan, van, SUV, pickup truck or motorcycle, with a weight rating of less than 14,000 pounds that undergoes final assembly in the United States. The deduction is not available for financed purchases of used vehicles or any vehicle that is assembled outside the United States.
Statistics show that sales of all new passenger cars in the U.S. totaled approximately 2.4 million last year and over 80% of those car sales were financed, often at the dealership.
For more information about the temporary deduction for interest paid on new vehicle purchases available through 2028, as well as other tax changes under the OBBBA, go to the IRS website here.
