A new tax form is coming for auto loans. Here's a free way to get ready.
Treasury finalized the vehicle loan interest deduction on September 8, 2026. 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.
Get the free toolkit See the two free screensWhat 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 copy to the borrower, starting with interest received in 2026.
- 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 is final. The form and instructions are still marked draft.
- 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.
- The borrower statement is due January 31. Paper returns are due February 28, electronic returns March 31, and most credit unions clear the ten-return electronic filing threshold on existing 1099 and 1098 volume alone.
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+ 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. Run it before anything that costs money, since the loans it disqualifies never reach the expensive tests. Expect three outcomes, not two: disqualified, clear, and needs manual review.
The full determination path
Four categories of tests, none of them optional: the borrower, the vehicle, the loan, and the paperwork. The simplified view below covers the shape of it. The full chart walks all twelve decision points, including the refinance gate and the negative equity carve-out.
The Vehicle Loan Interest Reporting Toolkit
Four parts plus a start-here guide, built from the final regulation and the draft form. No registration, no license terms, free to use and free to share.
What you need, and where
Three pages: what the rule is in six sentences, which part applies to where you already are, and the two free screens to run this week.
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 a stated default to 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, and what recurs every January.
VIN screening tool
Runs the vehicle-side tests in your browser against NHTSA's vPIC catalog. Paste VINs or load a CSV; nothing you enter is sent to CU Risk Advisors.
Download the complete toolkit
All four parts, the start-here guide, and the VIN tool in one ZIP file.
Download the toolkit (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. Run it on this site, or download it and run it on your own computer with nothing installed.
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 draft form or instructions. Confirm against the final release.
An unresolved interpretation. Needs your own tax or legal advice.
A credit union policy decision. No regulatory source supplies the answer.
Read the full breakdown: The IRS Handed Credit Unions an Auto Loan Compliance Nightmare