The IRS Auto Loan Interest Deduction: Final Rule & Form 1098-VLI Reporting

Turn the latest IRS guidance into action by preparing your data, systems, vendors, and reporting processes for the auto loan interest deduction and Form 1098-VLI requirements.

The new auto loan interest deduction is already impacting financial institutions, but two important pieces remain unfinished: the regulation is still proposed, and the final version of IRS Form 1098-VLI has not yet been released. That does not mean financial institutions should wait.

The December 2025 proposed regulation and subsequent guidance provide significant clarification on refinances, ancillary products, qualifying indebtedness, personal use, vehicle eligibility, and lender reporting. Importantly, taxpayers and interest recipients may rely on the proposed regulations before they are finalized if they follow them in their entirety and consistently.

The draft Form 1098-VLI provides an important roadmap for implementation. Institutions should be using it now to identify required data, map information across lending and core systems, address missing data, develop procedures, and begin testing their reporting processes. Institutions must also prepare for the IRS Information Returns Intake System (IRIS), which will become the electronic filing platform for 2026 information returns. Now is the time to determine whether your institution or a third-party vendor will handle Form 1098-VLI filing and make sure the necessary data and reporting processes are ready. Join this session to build your year-end action plan and leave knowing what your teams need to do now to avoid a last-minute reporting scramble.

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