1098-VLI Compliance Update: Transitional Guidance for 2025
The IRS has issued transitional guidance that gives lenders additional flexibility for vehicle loan interest reporting in 2025. After reviewing this update, FLEX will be adopting the transitional rules.
What This Means for the 2025 Tax Year
- Your members’ year-end statements will fully satisfy the IRS reporting requirement.
- No separate IRS form will be generated for vehicle loan interest for the 2025 tax year.
Why This Change Is Happening
Recent federal legislation (H.R. 1) introduced:
- A temporary $10,000 tax deduction for passenger vehicle loan interest
- New reporting requirements for lenders receiving $600 or more in interest on qualifying loans
Because the IRS has not finalized the required forms or processes for 2025, the IRS issued Transitional Guidance allowing lenders to satisfy reporting obligations by providing borrowers with an accurate 2025 annual statement.
More information is available on the IRS website.
Looking Ahead to 2026
- A new IRS form, 1098-VLI, will be required.
- The IRS is currently developing this form.
- FLEX is building system enhancements to support this requirement.
- The form will be available in FLEX for tax year 2026.
Helpful Tools
- FLEX System Reports
- Search for ‘New Loan Information Report’ in the main menu
- Search for ‘New Money Loaned Report’ in the main menu
- For vehicle information lookup, including Plan of Manufacture: Vin Decoder
If you have any questions or would like additional information, please message Shane Jensen, Support/Compliance Manager.