By Richard Rubin

Lenders won't face penalties if they don't give the Internal Revenue Service detailed information about which borrowers qualify for a tax breaks on auto-loan interest, the tax agency said Tuesday.

Congress created the deduction in this year's "one big, beautiful bill" and it's effective for new loans starting in 2025. The break applies only to loans for new vehicles with final assembly in the U.S.

The deduction is capped at $10,000. It starts to phase out when income reaches $100,000 for individuals and $200,000 for married couples.

The law requires lenders to give the IRS information about the loans, including the outstanding principal and the vehicle identification number. The IRS said Tuesday that the government and businesses need more time to change their systems to comply with the law.

Taxpayers trying to claim the deduction during the tax-filing season early next year will be able to rely on statements from their lenders that won't necessarily appear on forms sent to the IRS.

Those can be monthly or annual statements or an online account portal. The IRS will consider those statements as satisfying the reporting requirement.

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(END) Dow Jones Newswires

October 21, 2025 10:58 ET (14:58 GMT)

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