IRS Offers Transitional Relief on Auto Loan Interest Reporting for 2025

October 22, 2025

GoWest has received several questions from credit unions about new auto loan interest reporting requirements, so we wanted to share the latest guidance and clarification from the IRS.

The U.S. Department of the Treasury and the IRS have issued Notice 2025-57, providing transitional guidance and relief for lenders reporting interest received on auto loans for specified passenger vehicles in Tax Year 2025.

Under this guidance, credit unions will not need to file a new IRS form to report auto loan interest this year. Instead, they can meet the reporting requirement by providing borrowers with a statement showing the total amount of interest paid in 2025 — such as through an online portal, monthly or annual statement, or another accessible method.

Importantly, the IRS will not impose penalties on lenders who follow these interim reporting steps.

Background: The “No Tax on Car Loan Interest” Provision

When the One, Big, Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, it introduced Section 70203 – No Tax on Car Loan Interest.

This provision allows taxpayers to deduct up to $10,000 in qualified auto loan interest per year for tax years 2025–2028, without needing to itemize deductions.

To claim the deduction, borrowers must include their vehicle’s VIN number, and the interest must be tied to a first-lien loan on a new passenger vehicle used for personal purposes.

Qualifying vehicles include cars, minivans, vans, SUVs, pickup trucks, and motorcycles with a gross vehicle weight rating under 14,000 pounds that were assembled in the United States.

What Credit Unions Should Do Next

Credit unions should begin preparing to identify which loans meet the criteria for qualified passenger vehicles. To confirm whether a vehicle was assembled in the U.S., staff can reference:

• The dealer’s information label attached to the vehicle,
• The vehicle identification number (VIN), or
• The NHTSA VIN Decoder.

Credit unions will also want to determine how they plan to provide members with their 2025 interest totals —whether via existing statements, online systems, or a new communication method.

If you have questions about the new auto loan interest reporting requirements, contact GoWest’s compliance team at 800-546-4465 or [email protected].

Posted in Compliance Resources, Top Headlines.