The IRS has published the final copy of form 1098-VLI and the form’s instructions. This form is used to report interest paid on vehicle loans to document the vehicle interest deduction under IRC § 163(h)(4).
The final form made a few changes from the draft the IRS had previously offered. The final form adds two check box fields. Box 6 checks if the original use of the vehicle began with the payer of record, and box 7 checks if final assembly of the vehicle was performed domestically. These are requirements to qualify for the deduction.
A number of editorial changes were also made to the form.
Payees of interest income for qualifying loans must annually issue the form to report payments of $600 or more over the course of the year to the IRS and the payer of record. For tax year 2025, interim relief was offered for the reporting obligation; this relief will not be extended to tax year 2026. The form is due to borrowers by January 31 and to the IRS by February 28 if filed on paper or March 31 if filed electronically.
To review form 1098-VLI, follow this link. To review the form’s instructions, follow this link.
