File 1098-VLI Online
Looking for a way to file Form 1098-VLI online? 1099ly is an IRS-authorized eFile provider built to help you file 1098-VLI securely and efficiently. Form 1098-VLI is intended to report vehicle loan interest for applicable auto lenders.
Vehicle Loan Interest Statement · Copy B For Borrower
What is IRS Form 1098-VLI?
IRS Form 1098-VLI, also known as Vehicle Loan Interest Statement, is a draft information return intended for lenders to report interest received on a Specified Passenger Vehicle Loan (SPVL) from borrowers during the calendar year.
The One Big Beautiful Bill, which was signed into law on July 4, 2025, introduced a federal tax deduction for interest paid on certain personal use vehicle loans. This provision applies to tax years 2025 through 2028.
Form 1098-VLI is designed to support this deduction by enabling lenders to report qualifying interest payments. Borrowers can use it to substantiate their interest paid when claiming the deduction on their tax return.
The maximum annual deduction is up to $10,000 of vehicle loan interest. The deduction gradually phases out for taxpayers with modified adjusted gross income (MAGI) over $100,000 ($200,000 for married couples filing a joint return).
Vehicle & Loan Requirements
The deduction doesn't apply to all loans and vehicles. They must meet certain requirements under the applicable regulations.
To claim the deduction, the loan must be a Specified Passenger Vehicle Loan (SPVL). This includes any loan taken out after December 31, 2024, for the purchase of an Applicable Passenger Vehicle (APV) for personal use, and that is secured by a first lien on that APV.
Meanwhile, an APV is a vehicle that meets the following criteria:
- It is a car, minivan, van, SUV, pickup truck, or motorcycle
- It has a gross vehicle weight rating (GVWR) of less than 14,000 pounds
- It is finally assembled in the United States
- Its original use begins with the purchaser (i.e., it is a new vehicle)
- It is manufactured primarily for use on public streets, roads, and highways
You can verify a vehicle's final assembly location by checking the manufacturer's label on the vehicle or by entering its VIN on the National Highway Traffic Safety Administration (NHTSA) website.
Vehicles that are not eligible include: Used vehicles, leases, and vehicles assembled outside the United States.
Certain loan-related restrictions, such as financing from related parties, may also affect eligibility.
When Should Lenders File Form 1098-VLI?
You must file Form 1098-VLI if you received $600 or more in interest on an SPVL during the calendar year in the course of your trade or business, from an individual, decedent's estate, or nongrantor trust. This applies even if the filer is not a traditional lender, such as a dealer offering in-house financing.
If you are required to file 1098-VLI, you must also provide a statement to the payer of record (person on your books and records listed as the principal borrower).
You must file a separate Form 1098-VLI for each SPVL, and the $600 threshold applies to each loan individually. This means if a borrower has multiple vehicle loans with you but paid less than $600 in interest on one of them, you don't need to file a Form 1098-VLI for that specific loan, even if their combined interest across all loans exceeds $600.
Also, if you collect the interest payments on behalf of someone else (another party, for example, as a servicing entity) and are the first to receive the funds, you must file Form 1098-VLI using your own name, address, TIN, and phone number. This applies even if you just pass on the interest along to another party. But the person you collected it for doesn't have to file.
When to skip filing: If the payer of record is a nonresident alien, foreign non-grantor trust, or foreign estate.
Key Deadlines
Keep these deadlines in mind to avoid penalties and stay compliant:
| Filing Type | Due Date |
|---|---|
| Recipient Copy (Borrower Statement) | January 31, 2027 |
| IRS eFile (via IRIS) | March 31, 2027 |
| IRS Paper Filing | February 28, 2027 |
Note:
- If a deadline falls on a weekend or federal holiday, it typically shifts to the next business day.
- These deadlines are based on standard 1099-series filing timelines and may be updated when final IRS guidance for Form 1098-VLI is issued.
Transition Relief for 2025 Reporting
Since the OBBBA was enacted midyear, the IRS issued Notice 2025-57 to provide transitional guidance and give lenders extra time to update their systems and comply with the new reporting requirements.
The IRS also recognized that borrowers need to know how much interest they paid in 2025 in order to claim the interest deduction on their tax returns.
So, lenders don't need to file Form 1098-VLI with the IRS for the 2025 tax year. Instead, they can meet their reporting obligations by simply making the total SPVL interest received available to the borrower by January 31, 2026. This can be done through:
- an online account or portal
- a monthly statement
- an annual statement
- or any similar method that clearly provides the information to the borrower
The IRS says it won't impose penalties on lenders for failure to file information returns and provide payee statements, as long as they satisfy their reporting obligations as described in the notice.
This means the first mandatory filing year for Form 1098-VLI is 2026.