The Internal Revenue Service (IRS) released Notice 2025-57, offering temporary relief for businesses handling interest payments on specified passenger vehicle loans. This guidance stems from the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, and addresses new reporting requirements under Internal Revenue Code Section 6050AA.
The OBBBA introduced a temporary tax benefit for individuals by allowing a deduction for qualified passenger vehicle loan interest (QPVLI) on personal vehicles.
“As amended by the OBBBA, section 163(h)(4) provides that the term ‘personal interest’ … does not include ‘qualified passenger vehicle loan interest’ … for taxable years beginning after December 31, 2024, and before January 1, 2029.”
This means individuals can deduct interest paid on specified passenger vehicle loans, which are defined as loans taken out after December 31, 2024, secured by a first lien on a personal-use passenger vehicle, for tax years 2025 through 2028.
However, this deduction comes with a new reporting obligation for businesses.
Businesses that receive $600 or more in interest from an individual on a specified passenger vehicle loan in a calendar year must now file an information return with the IRS. The notice states:
“Under section 6050AA(a), any person engaged in a trade or business … who … receives from any individual interest aggregating $600 or more for any calendar year on a specified passenger vehicle loan, must file an information return reporting the receipt of interest.”
Businesses must also provide a written statement to the borrower by January 31 of the following year, including contact information and key loan details.
Recognizing the challenges of implementing new systems mid-year, the IRS is providing transitional guidance for interest received in calendar year 2025.
“The recipient may satisfy the reporting obligations under section 6050AA for interest received in calendar year 2025 on a specified passenger vehicle loan by making a statement available to the individual on or before January 31, 2026, indicating the total amount of interest received in calendar year 2025 on a specified passenger vehicle loan.”
Provide the total interest amount via:
This relief gives businesses time to update systems while ensuring borrowers receive the information needed to claim their deduction.
The notice emphasizes the importance of maintaining accurate records. Recordkeeping requirements are critical to support both IRS compliance and taxpayer deductions.
Businesses must retain records to support IRS filings for the same period that they retain records supporting Forms W-2 or 1098.
If your business finances passenger vehicles for personal use (such as auto dealers, financial institutions, or finance companies), you are likely subject to these rules. For 2025, focus on:
Failure to comply in future years could trigger penalties, unless reasonable cause is demonstrated.
The IRS is still developing forms and systems for full implementation in 2026. In the meantime, businesses should review loan portfolios, update accounting systems, and ensure recordkeeping requirements are met.
Contact GBQ today for expert guidance on compliance, system updates, or assistance with specified passenger vehicle loan reporting under the OBBBA. Our tax professionals can help you navigate this transition smoothly.