📢 Treasury & IRS Announce Transition Relief for 2025

📌 What Businesses Need to Know About Reporting Car Loan Interest Under the “One Big Beautiful Bill”

The IRS and the U.S. Department of the Treasury have just announced important transition relief for businesses affected by the new reporting requirements under the One Big Beautiful Bill (OBBB) — specifically for interest received on car loans during tax year 2025.

If your business provides auto loans or receives interest from qualified vehicle financing, this update will help you stay compliant while easing the burden of immediate system changes.

⚠️ What’s Changing in 2025

Under the OBBB, lenders and other interest-receiving businesses must report interest income of $600 or more received from individuals on “qualified passenger vehicle loans.”

However, the IRS has issued Notice 2025-57, granting transition relief for 2025.

This means that for the 2025 reporting year, you won’t face penalties if you follow the simplified guidance below — giving you extra time to adapt to the new reporting framework.

✅ What You Need to Do

For the 2025 calendar year, your business will be considered fully compliant if you:

1. Provide borrowers with a clear statement showing the total interest received during the year.

2. Deliver this statement through any of the following methods:

3. Your business’s online portal (if the buyer can easily access it)

4. A monthly loan statement

5. An annual summary statement

6. Or any similar method that accurately communicates the information to the borrower

7. If you do this, the IRS will not penalize you for not filing the standard information return or providing a separate payee statement for 2025.

   
   

🙋🏽🙋🏾‍♂️ What Qualifies as a “Passenger Vehicle”

A qualified passenger vehicle includes:

1. Cars, minivans, SUVs, vans, pickup trucks, and motorcycles

2. With a gross vehicle weight rating under 14,000 pounds

3. That underwent final assembly in the United States

   
   

The loans must also be used for personal use vehicles — not for business or fleet purposes.

💡 Why This Matters

This relief period gives businesses and lenders more time to adjust to the new federal reporting rules under OBBB. It’s designed to:

1. Prevent confusion during implementation

2. Allow financial institutions to update software and processes

3. Protect borrowers by ensuring they still receive clear documentation of interest paid

🧩 Practical Takeaways for Accountants & Small Businesses:

1. If you or your clients provide financing for vehicle purchases, ensure the 2025 borrower statements clearly list total annual interest.

2. Document your delivery method — whether electronic or paper — to prove compliance if ever audited.

3. Prepare now for full reporting obligations to resume in 2026 once the transition period ends.

4. Keep an eye out for future IRS updates or form releases related to OBBB compliance.

   
   

🕒 Looking Ahead

This transitional year is your opportunity to streamline internal systems, review your reporting workflow, and ensure all vehicle loans meet the OBBB definition of “qualified passenger vehicle.”

The IRS made it clear: for 2025, accuracy and communication matter more than filing format — so make sure borrowers get the correct interest totals, and your business will be protected from penalties.

🏢 About JWJ Solutions LLC

At JWJ Solutions, we help small businesses stay compliant, profitable, and stress-free through every IRS update and accounting change. From tax strategy to bookkeeping and business setup, our goal is to make sure you never pay more than you owe — and always stay one step ahead.

IRS Reference:

https://www.irs.gov/newsroom/treasury-irs-provide-transition-relief-for-2025-for-businesses-reporting-car-loan-interest-under-the-one-big-beautiful-bill