Form 1098-VLI is final. The free toolkit is updated to match.
Treasury finalized the vehicle loan interest rules on September 8, 2026, and the IRS released the final form and instructions on September 30. The deduction belongs to your members. The determination, the recordkeeping, and the filing belong to you, for every qualifying loan on your books since January 2025.
Two ways in, depending on your role
The short version
Two one-page documents, plus a companion you dip into
For the CEO, the board, and whoever has to get the project started this week. Ten Steps shows the shape of the work. The decisions form lists what your credit union has to decide and gives you a place to record it. The companion explains any decision you are unsure about.
The full toolkit
A Start Here guide and four parts, about 58 pages
For whoever does the work: the data pull, the vendor inquiry, the evidence standards, the file review, and the January calculation and filing. It carries the reasoning, the citations, and the worksheets behind every step.
They cover the same rule and the same decisions, and they agree with each other. The short version is the map. The toolkit is the working detail, and the companion points to the toolkit section behind each decision.
What the rule actually asks of you
- A lender that receives $600 or more in qualifying interest on a Specified Passenger Vehicle Loan must file Form 1098-VLI and furnish a statement to the borrower, starting with interest received in 2026. The $600 test runs loan by loan and is never combined across a member's loans.
- Qualifying indebtedness reaches back to January 1, 2025. The 2025 transition relief (a general interest statement, no loan-level determination) has ended. Every loan booked since then needs a specific answer.
- The regulation, the form, and the instructions are all final. The instructions are Rev. December 2026, for calendar year 2026 and later years.
- There is no safe harbor. Reasonable cause under IRC 6724(a) is a penalty-abatement argument you make after an incorrect filing, not a compliance framework.
- Borrower statements are due January 31. Electronic returns are due March 31, and paper returns February 28. In 2027, January 31 and February 28 both fall on a Sunday, so the next business day applies. Most credit unions clear the ten-return electronic filing threshold on existing 1099 and 1098 volume alone.
Start with three short documents
The shape of the project fits on one page, and so do the decisions it asks your credit union to make. None of these documents tells you what to decide. The decisions belong to your credit union and its advisors.
Ten Steps to Get Started
The whole project in three groups: decide first, work the back book once, then run the monthly and January routine. Each step points to the decision it depends on.
Decisions Before Loan File Review
Seventeen decisions the rule leaves to you, each labeled OPEN or RISK, with room to record your answer, its basis, and who approved it. Settle Part A before anyone opens a file.
Why Each Decision Matters
The companion to the decisions form, numbered to match. For each decision: where it comes up, what it means, and why it matters. Read only the ones you are unsure about.
Run these two screens before you open a single file
Both are free. Neither needs a policy decision from anybody. Run them first and every number in the project gets smaller.
The interest floor
Qualifying interest is gross interest received multiplied by the loan's qualifying ratio, and that ratio can never exceed one. A loan whose interest for the year can't reach $600 can't produce $600 of qualifying interest, so it comes out before any eligibility work. Watch the one exception: a $600 or larger reimbursement of prior-year overpaid interest is its own filing trigger.
The VIN screen
Decoding your VINs in bulk against the free NHTSA vPIC catalog resolves three vehicle-side tests at once: U.S. final assembly, GVWR under 14,000 pounds, and qualifying vehicle class. It also checks each VIN's check digit, because the stored VIN goes on the return and there is no relief for a clerical error. Expect three outcomes: fails a test, clear, and needs manual review.
The full determination path
Four groups of tests, none of them optional: the borrower, the vehicle, the loan, and the reporting. The simplified view below shows the shape of it. The full chart walks all thirteen decision points, including the refinance gate and the negative equity carve-out.
What changed in version 1.2
Version 1.1 was written against the draft form and instructions. If your credit union worked from it, these are the changes worth acting on. The full list is on the last page of the Start Here guide.
Box 4 was clarified, and 1.1 needed correction
Version 1.1 said outstanding principal as of the reporting date. The final instructions clarified Box 4 as principal as of January 1, or as of the origination or acquisition date for a loan originated or acquired during the year. In the first filing year that covers every loan made in 2026. If you have already mapped Box 4 with your vendor, check it.
The draft references are gone
The Form label now means the final form or its instructions. Part 4, section 12 now records what the final release settled, and names the three questions from that list it left open. Other OPEN items, such as the rebate offset, were never taken up by the release.
New in Part 4
What counts as interest, including late and default charges where they are interest for tax purposes. A prior overpayment credited against this year's payments stays in Box 1. Box 6 is also checked when the payer of record took over the loan on a prior obligor's death. And the one case where the qualifying ratio moves after funding.
The VIN tool is now a separate download
Some credit union networks blocked the 1.1 ZIP because it carried an HTML file, so the tool now lives outside it. Version 1.2 of the tool checks each VIN's check digit and sends buses, low speed vehicles, incomplete vehicles, and motorhomes to review instead of failing them.
The Vehicle Loan Interest Reporting Toolkit
Four parts plus a Start Here guide, built from the final regulation and the final form and instructions. Version 1.2, October 2026. No registration, no license terms, free to use and free to share.
What you need, and where
Four pages: what the rule is in six sentences, which part applies to where you already are, the two free screens to run this week, and what changed in version 1.2.
Identification questions
Thirty questions in three sections: where each required answer lives, whether a system can produce it, and what needs a vendor, a file review, or a credit union decision.
Gap inventory and vendor requests
The gap register with loans and hours attached, a written vendor inquiry with a cover note, the fallback if a vendor release slips, and what to capture on new originations.
Policy decisions and evidence standards
Fourteen decisions, each with one way of reasoning through it that your credit union can accept, modify, or reject, plus the decision log, the tax position memo, and the board page.
Calculating, filing, and the annual cycle
The qualifying ratio, pro rata allocation, the Box 1 figure, a box-by-box map, quality control, corrections, what recurs every January, and what the final release settled.
VIN screening tool
Runs the vehicle-side tests in your browser against NHTSA's vPIC catalog. Kept out of the ZIP so networks that block HTML downloads can still get the toolkit. See below.
Download the complete toolkit
All four parts, the Start Here guide, and a README in one ZIP file. Word documents only.
Download the toolkit, version 1.2 (ZIP)Run the VIN screen
Paste a list or load a CSV. Results come back as your original columns with the screen appended, batched automatically for NHTSA's fifty-VIN limit per request. Every row carries the tool version and the date it was screened. Run it on this site, or download it and run it on your own computer with nothing installed. Nothing you enter is sent to CU Risk Advisors.
How the labels work
Every substantive point in the toolkit carries one label or none. A point with no regulatory source never appears to have one.
A settled requirement.
From the final form or its instructions. Mechanical.
An unresolved interpretation. Needs your own tax or legal advice.
A credit union policy decision. No regulatory source supplies the answer.
Previous version. Toolkit version 1.1 (September 2026) was written against the draft form and instructions, and version 1.2 replaces it in full. Its Box 4 guidance has since been clarified and corrected in 1.2. It stays available for credit unions that need to see what they relied on. Download version 1.1 (ZIP)