Form 1098-VLI Explained: What It Is and Who Needs to File It (2025–2026)

Your lender sent you a new tax form this year. Form 1098-VLI sits in your mailbox or inbox, and you have no idea what it means for your tax return.

I know this because the IRS rolled out Form 1098-VLI in 2025 under the One Big Beautiful Bill Act - one of the largest tax law changes for individual borrowers in decades. Most people with auto loans have never seen this form. Yet it directly affects how much interest you can deduct and how much you'll owe.

Form 1098-VLI is the Vehicle Loan Interest Statement. It reports the interest you paid on a qualifying new vehicle loan. If you paid $600 or more in qualifying interest during 2025, your lender must furnish you this form by January 31, 2026. That interest becomes a potential deduction worth up to $10,000 per year through 2028 as part of the new car loan interest deduction - available to you whether you take the standard deduction or itemize.

This guide walks through every section of Form 1098-VLI. You'll see exactly what each box means, which numbers matter for your 2025 tax return, how the form differs from what many people expect, and how to spot errors before they cost you money.

What Is Form 1098-VLI and Why Did Your Lender Send It

Form 1098-VLI is an IRS information return that shows how much interest you paid on a qualifying vehicle loan during the calendar year. The form exists because Congress created the new auto loan interest deduction in the One Big Beautiful Bill Act (H.R. 1, Public Law 119-21), signed July 4, 2025.

Think of it as the vehicle loan version of Form 1098 for mortgage interest. Your lender tracks the interest you pay each month, then reports the annual total to both you and the IRS. The form includes details about your vehicle that prove it qualifies for the deduction under IRC §6050AA, the new reporting section added by the law.

The reporting threshold sits at $600. If you paid less than $600 in vehicle loan interest during 2025, your lender does not have to furnish Form 1098-VLI. You can still claim a deduction if you have documentation showing what you paid.

For 2025 only, the IRS issued IRS Notice 2025-57, giving lenders transitional relief. Instead of the official Form 1098-VLI, your lender may send a monthly statement or year-end summary showing your total interest paid. That alternative statement works for your 2025 tax return.

Starting in 2026, lenders must use the actual Form 1098-VLI. No more substitutes or alternate formats.

Form 1098-VLI vs Form 1099-VLI - Clearing Up the Confusion

Before going further, let's address the single most common point of confusion I see with this form.

There is no such thing as Form 1099-VLI. If you've been searching for "1099-VLI" or "who receives form 1099-VLI," you're looking for the right information but using the wrong form number. The correct form is Form 1098-VLI, not 1099-VLI.

The confusion makes sense. The 1098 and 1099 series of IRS forms are used for reporting various types of income and interest, and many taxpayers search for "1099" when they mean "1098." Here's the simple distinction:

• Form 1098-VLI - Vehicle Loan Interest Statement. Issued by your lender. Reports interest you paid. Used to claim the auto loan interest deduction on your 2025 tax return.
• Form 1099-VLI - Does not exist. No IRS form carries this designation.

If someone at your workplace, a tax preparer, or a website references "Form 1099-VLI," they mean Form 1098-VLI. The IRS draft form and instructions are available at irs.gov and carry the designation "1098-VLI" throughout.

What Is a Specified Passenger Vehicle Loan (SPVL)

Reading IRS publications about Form 1098-VLI, you'll see the term SPVL - Specified Passenger Vehicle Loan. This is the IRS term for the type of auto loan that triggers both the reporting requirement and the interest deduction.

Per IRC §6050AA(d)(2), an SPVL is indebtedness incurred after December 31, 2024, for the purchase of a qualifying new vehicle for personal use, secured by a first lien on that vehicle. The law calls the qualifying vehicle an Applicable Passenger Vehicle (APV).

What counts toward the SPVL loan balance:

• Vehicle service plans and extended warranties customarily financed with vehicle purchases
• Sales taxes and title/registration fees rolled into the loan
• Other vehicle-related charges customarily included in purchase financing

What does not count and does not generate deductible interest:

• Collision or liability insurance rolled into the loan
• Negative equity from a trade-in vehicle (the amount you owed on your old car beyond its value)
• Boats, trailers, or other non-vehicle property bundled into the same financing
• Loans between related persons as defined in IRC §§267(b) or 707(b)(1)

Your Form 1098-VLI Box 1 will show total interest received on the SPVL. It may include interest on amounts that don't qualify if your lender can't separate the portions. You are responsible for calculating the non-deductible share if your loan includes ineligible amounts.

Who Gets Form 1098-VLI From Their Lender

You receive Form 1098-VLI if you meet all these conditions during 2025:

• You paid $600 or more in interest on a qualifying vehicle loan
• Your loan originated after December 31, 2024
• The vehicle is new - original use commences with you as the purchaser
• Final assembly occurred in the United States
• Your loan is secured by a first lien on the vehicle
• The vehicle is for personal use - not business, fleet, or commercial purposes
• The vehicle weighs less than 14,000 pounds gross vehicle weight rating

Qualifying vehicle types include cars, minivans, vans, sport utility vehicles, pickup trucks, motorcycles, and electric vehicles that meet the US assembly requirement. Used vehicle purchases do not qualify - original use must begin with you. Leased vs. financed vehicles is a critical distinction here too: leased vehicles do not qualify since the law explicitly excludes lease financing from the SPVL definition.

Refinanced loans qualify under specific rules. If you refinanced a pre-2025 vehicle loan during 2025 through 2028, you can deduct interest - but only on the portion of the new loan that does not exceed your original loan balance at refinancing. The excess does not qualify.

Your income affects whether the deduction helps. The benefit starts phasing out at $100,000 modified adjusted gross income (MAGI) for single filers and $200,000 for married couples filing jointly - see the MAGI phase-out guide for the full calculation. For every $1,000 above those thresholds, your deduction drops by $200. The deduction disappears entirely at $150,000 (single) and $250,000 (joint).

What Lenders Must Do and When

Understanding lender obligations helps you know what to expect - and what to do if you don't receive your form.

Under IRC §6050AA, any lender who receives $600 or more in interest on an SPVL from an individual must report that interest. This includes banks, credit unions, finance companies, and auto dealers who provide purchase financing. A separate Form 1098-VLI must be filed for each qualifying loan.

The deadlines for 2026 reporting (and all years after 2025) are:

• January 31 - Lender must furnish Copy B to the borrower
• February 28 - Lender must file paper copies with the IRS
• March 31 - Lender must file electronic copies with the IRS

Lenders who fail to file or furnish on time face penalties under IRC §§6721 and 6722. Penalties range from $60 per return for quick corrections to $330 or more per return when not corrected by August 1. Intentional disregard carries a $660 minimum with no annual cap.

For 2025 specifically, the IRS waived formal Form 1098-VLI requirements under Notice 2025-57. Your lender satisfies its 2025 obligation by furnishing you a clear statement - through an online portal, regular monthly statement, or annual summary - showing your total interest paid on the SPVL during 2025. No IRS filing is required for 2025 interest.

Breaking Down Every Box on Form 1098-VLI

The IRS draft Form 1098-VLI and its instructions organize information across five primary boxes. Each box serves a specific purpose in verifying your loan and calculating your deduction. For a complete line-by-line walkthrough of how each box flows into Schedule 1-A, see our Form 1098-VLI line-by-line guide.

Box 1 - Vehicle Loan Interest Received by Lender

Box 1 shows the total dollar amount of SPVL interest your lender received from you during the calendar year. The number covers all qualifying interest payments from January 1 through December 31.

Check this amount against your loan statements. Add up the interest portion from every monthly payment. If Box 1 does not match your records within a few dollars, contact your lender immediately.

This is the starting number for your deduction - but not necessarily what you'll claim. The deduction is capped at $10,000 per year, and income phase-outs may further reduce your deductible amount. Copy B of the form includes a note that the amount shown may not be fully deductible.

Box 2 - Vehicle Year, Make, Model, and VIN

The draft form combines four sub-boxes under Box 2: year (2a), make (2b), model (2c), and Vehicle Identification Number (2d). Together, these fields identify your specific vehicle and allow the IRS to verify eligibility.

The VIN is the most critical field here. You must report this exact 17-character code on Schedule 1-A when claiming your deduction. The IRS uses the VIN to cross-reference the vehicle's final assembly location and model year. Before you file, take a moment to verify your VIN qualifies - one digit error or a vehicle assembled outside the US invalidates your entire deduction.

Write down this VIN carefully and compare it to your vehicle title or registration. The model year must be 2025 or later for loans originated in 2025.

Box 3 - Loan Origination Date and Acquisition Date

Box 3a shows when your loan was originally made. Box 3b shows when your current lender acquired the loan if they purchased it from another lender - it stays blank if your lender originated the loan directly.

The origination date in Box 3a matters most for your deduction. This date must be January 1, 2025, or later. Loans originated before 2025 do not qualify unless you refinanced into a new qualifying SPVL after December 31, 2024.

A refinance creates a new origination date. The IRS treats refinancing as starting a new loan, which opens the door to deduction eligibility even if you originally purchased the vehicle before 2025 - though the deductible interest is limited to what corresponds to your prior outstanding balance.

Box 4 - Outstanding Principal

Box 4 reports your outstanding loan principal as of January 1, 2025 - or as of your loan origination or acquisition date if your loan started during 2025. The IRS uses this to verify the loan remains active and secured by the vehicle.

A zero balance means you paid off the loan during the year. You can still deduct the interest you paid before payoff - Box 1 captures that full amount regardless of when the loan ended.

Box 5 - Refund of Overpaid Interest

Box 5 shows any refund or credit your lender issued for prior-year overpayment of SPVL interest. The IRS instructions are specific about how to handle this amount: do not deduct it from your current interest. Instead, report the refund amount as other income on Schedule 1 (Form 1040). Handling it incorrectly - by simply netting it against Box 1 - could result in an underpayment.

Common Errors on Form 1098-VLI That Cost You Money

Lenders make mistakes. Incorrect interest totals, wrong VINs, and missing loan dates are all documented issues in the first year this form has been in circulation. Each error can delay your refund or trigger an IRS review.

Here's what to verify before you file:

• Interest total matches your payment history. Add up the interest portion from every 2025 statement. The total should equal Box 1 within a few dollars. Even a $50 discrepancy warrants a call to your lender.
• VIN has exactly 17 characters. Check every digit against your vehicle title, registration, or window sticker. A typo here means automatic rejection of your deduction.
• Origination date is January 1, 2025 or later. Earlier dates mean the loan does not qualify unless you refinanced after December 31, 2024.
• The loan secured the vehicle with a first lien. Second liens and unsecured loans do not qualify.
• Vehicle type qualifies. Cars, SUVs, pickup trucks, minivans, vans, and motorcycles with a GVWR under 14,000 pounds work. Vehicles above that weight rating do not.
• New vehicle only. If your lender accidentally issued a Form 1098-VLI on a used vehicle loan, that form does not entitle you to the deduction.

What if you spot an error? Call your lender's customer service immediately. Request a corrected Form 1098-VLI in writing. Most lenders will issue a revised form within two weeks. Do not file with incorrect information - the IRS automatically receives a copy of your Form 1098-VLI. Any mismatch between what your lender reported and what you claim triggers a review.

For final assembly verification, use our VIN decoder guide for the auto loan deduction to confirm your vehicle was assembled in the United States. VINs starting with digits 1, 4, or 5 generally indicate US final assembly. You can also check the vehicle's window sticker, which lists the final assembly plant.

How Form 1098-VLI Connects to Your Tax Return

Form 1098-VLI gives you the numbers you need for the new Schedule 1-A (Form 1040), Part IV - "No Tax on Car Loan Interest." Schedule 1-A then flows to Form 1040 line 13b.

The process works like this. You take the interest amount from Form 1098-VLI Box 1 (capped at $10,000). You enter that amount on Schedule 1-A Part IV along with your VIN. Schedule 1-A Part I calculates your modified adjusted gross income (MAGI). Part IV then calculates any income phase-out reductions. The final deduction amount transfers to Form 1040 line 13b, reducing your taxable income. For a full breakdown of the IRS car loan interest reporting process, including how Schedule 1-A interacts with your 1040, see our dedicated guide.

One point to be clear on: this deduction reduces your taxable income - not your adjusted gross income (AGI). It is available to you whether you take the standard deduction or itemize, but it does not change your AGI. This distinction matters if you rely on AGI for other tax calculations like IRA deductibility, education credits, or Medicare premium surcharges. This also applies to electric vehicle loans that meet the US assembly requirement - EVs follow the same Schedule 1-A process.

The $10,000 cap applies per return per year, not per vehicle. If you financed two qualifying vehicles in 2025, you can deduct interest from both loans - but only up to $10,000 total. Your phase-out calculation also applies to the combined amount.

Ready to start tracking your reporting? Create a free account to manage your Form 1098-VLI obligations in one place.

What to Do If You Never Received Form 1098-VLI

You paid qualifying interest but your lender did not send the form or a qualifying statement. This is more common than it should be - especially in 2025 when the requirement is brand new.

Contact your lender first. Request a year-end interest statement showing your total interest paid, loan origination date, and vehicle details. For 2025, the IRS accepts alternative statements under Notice 2025-57 in place of the official form. Monthly statements, online portal records, or annual summaries all qualify as long as they show the total interest received.

Keep detailed records. Save every monthly payment confirmation. Print your loan agreement showing the origination date and VIN. Gather your vehicle's window sticker proving US assembly.

You can claim the deduction without the official Form 1098-VLI for tax year 2025 if you have supporting documentation. The burden falls on you to prove the loan qualifies and the interest amount is correct. For a line-by-line breakdown of how to use the form when you do receive it, see our Form 1098-VLI line-by-line guide.

After 2025, missing Form 1098-VLI becomes more problematic. Starting with 2026 tax returns, lenders must use the official form. If your lender fails to provide it, the IRS may question your deduction more aggressively since it will have no matching information return on file.

Income Phase-Outs and How They Reduce Your Deduction

The vehicle loan interest deduction starts disappearing at certain income levels. Per IRC §163(h)(4)(C), single filers begin losing the benefit at $100,000 MAGI. Married couples filing jointly start phasing out at $200,000 MAGI. Our full MAGI guide for the auto loan deduction walks through every calculation scenario in detail.

The phase-out works in $1,000 increments. For every $1,000 (or portion thereof) by which your MAGI exceeds the threshold, your deduction drops by $200. The "portion thereof" language means partial increments round up - so $100,001 counts as a full increment, not a fraction of one.

Here's how the math works. Say you're single with $120,600 MAGI and $10,000 in qualifying interest. Your excess MAGI is $20,600. Dividing by $1,000 and rounding up gives 21 increments. Multiply by $200 and you get a $4,200 reduction. Your deduction falls to $5,800.

The deduction disappears entirely at $150,000 for single filers and $250,000 for joint filers. Above those incomes, you get no benefit regardless of interest paid.

Form 1098-VLI does not account for phase-outs. Box 1 shows your full interest amount. Schedule 1-A Part I calculates your MAGI, and Part IV applies the phase-out reduction. Your tax software handles this automatically once you enter the Box 1 amount and your VIN.

Special Situations That Affect Form 1098-VLI Reporting

Refinancing, co-borrowers, and mid-year purchases create unique reporting scenarios worth understanding before you file.

Refinanced Loans

You refinanced an older vehicle loan in 2025. Your Form 1098-VLI shows interest from the new loan only - starting from the refinance date. The deductible amount gets limited. Per IRC §163(h)(4)(E), you can only deduct interest on the portion of the new loan that does not exceed your outstanding balance at the time of refinancing. If you took cash out or rolled in fees that increased the loan amount, that additional interest does not qualify. See our guide on the refinance auto loan deduction for how to calculate your qualifying vs. non-qualifying interest when you've refinanced.

Your lender's Form 1098-VLI Box 1 will show all interest you paid on the new loan without making this distinction. You are responsible for calculating the non-deductible portion based on your loan documents and the balance at refinancing.

Co-Borrowers

Two people on the loan means careful coordination at tax time. The lender typically sends Form 1098-VLI to the primary borrower only. If you are co-borrowers, decide who claims the deduction. Only one person can take it on a given return - you cannot split the deduction between two separate tax returns. Whoever claims it must report the full interest amount and meet all eligibility requirements independently.

Vehicle Purchased Mid-Year

You bought your vehicle in August 2025. Form 1098-VLI shows only the interest paid from August through December. That is correct - you can only deduct what you actually paid during the calendar year. Your first full year of deductions comes in 2026 when you will pay interest for all 12 months and receive a Form 1098-VLI reflecting that full amount.

Sold or Traded the Vehicle

You traded your 2025 vehicle in November. Form 1098-VLI shows interest through your payoff date. You can deduct that amount even though you no longer own the vehicle. If you financed a replacement vehicle, it may generate a second Form 1098-VLI - but only if it is new. If you replaced it with a pre-owned vehicle, used cars don't qualify for the deduction regardless of how recently they were manufactured. Both qualifying deductions combine toward your $10,000 annual limit.

Leasing Instead of Financing

If you lease a vehicle rather than finance it, Form 1098-VLI does not apply to you and neither does the deduction. The One Big Beautiful Bill Act explicitly excludes lease payments from the SPVL definition. This is one of the most consequential differences between leasing and buying right now - review our breakdown of leased vs. financed vehicles and the deduction before your next vehicle decision.

How Long This Deduction Lasts and What Happens After 2028

The vehicle loan interest deduction expires after tax year 2028. Per IRC §163(h)(4)(A), the deduction applies to taxable years beginning after December 31, 2024 and before January 1, 2029. That covers four years: 2025, 2026, 2027, and 2028. Before you file, it's worth reviewing the 5 things to know before you deduct your car loan interest to make sure you have everything in order.

After 2028, auto loan interest reverts to non-deductible personal interest under the general rules. If you finance a vehicle in 2029 or later, the interest does not qualify - even if you purchased the vehicle during the eligible window.

Loans originated during 2025-2028 also do not get grandfathered beyond the expiration date. Once 2029 arrives, the deduction is gone for all taxpayers regardless of when their loan started.

This creates a real timing window. If you are considering a new vehicle purchase, buying during the 2025-2028 period and financing within those years maximizes your potential tax benefit before the deduction expires.

State Tax Treatment of Vehicle Loan Interest

Form 1098-VLI is a federal form. Whether your state allows a similar deduction depends on your state's tax law and how it conforms to federal changes.

Most states link their tax calculations to federal adjusted gross income or federal taxable income. Because the vehicle loan interest deduction reduces federal taxable income (not AGI), states that start with federal taxable income will generally reflect the deduction automatically. States that start with federal AGI will not see any effect from this deduction since it does not alter AGI.

Some states do not conform to federal tax changes immediately. They may require separate legislation to adopt the vehicle loan interest deduction. Check with your state tax agency or a local tax professional before assuming the deduction flows through to your state return.

Keeping Records Beyond Form 1098-VLI

Form 1098-VLI is essential but not sufficient documentation on its own. The IRS may ask for additional proof during an audit or correspondence review.

Keep these documents with your tax records:

• Your original loan agreement showing the origination date, first lien status, and loan amount
• Monthly payment statements breaking down principal and interest for each payment
• Vehicle window sticker or purchase documents proving US final assembly
• Title or registration confirming the VIN matches Form 1098-VLI exactly
• Any correspondence with your lender about interest amounts or form corrections

Store these records for at least three years after filing. The IRS can audit returns within three years in most cases. If you claimed a deduction large relative to your income, or if there was substantial understatement of income, the IRS has six years to challenge the return. Keeping records longer in those cases is worth the extra file space.

Next Steps - What to Do With Form 1098-VLI Now

You have Form 1098-VLI in hand. Here's your action plan.

First, verify every number. Check Box 1 against your loan statements. Confirm the VIN matches your vehicle documents. Make sure the origination date in Box 3a is January 1, 2025 or later.

Second, calculate your deduction eligibility. If your MAGI exceeds $100,000 (single) or $200,000 (joint), run through the phase-out calculation before entering anything on Schedule 1-A. The MAGI auto loan deduction guide has the step-by-step formula.

Third, gather supporting documents. Don't rely on Form 1098-VLI alone. Collect your loan agreement, payment records, and vehicle documentation as outlined above.

Fourth, complete Schedule 1-A when you file your 2025 tax return. Enter the interest from Box 1 (up to the $10,000 cap), add your VIN, and work through Parts I and IV for your MAGI and phase-out calculation.

Fifth, keep everything. File Form 1098-VLI with your tax records along with all supporting documents for at least three years.

If you spot errors on Form 1098-VLI, don't wait. Contact your lender today and request corrections in writing. The sooner you fix errors, the smoother your filing process.

The vehicle loan interest deduction reduces your tax bill when you understand how Form 1098-VLI works. Check your form carefully, claim what you're entitled to, and keep solid records. Need help managing your compliance workflow? Create an account at Vehicle Loan Interest to track your Form 1098-VLI data and stay organized through the 2025-2028 deduction window.

Frequently Asked Questions About Form 1098-VLI

What is Form 1098-VLI?

Form 1098-VLI is the Vehicle Loan Interest Statement, an IRS information return created under the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025). Lenders use it to report interest you paid on a qualifying new vehicle loan. Borrowers use the information to claim the auto loan interest deduction on their federal tax return. It operates similarly to Form 1098 for mortgage interest.

Is it Form 1098-VLI or Form 1099-VLI?

The correct form number is 1098-VLI. Form 1099-VLI does not exist. The confusion between the 1098 and 1099 series is common, but there is only one vehicle loan interest reporting form and it is designated 1098-VLI. The IRS draft form and instructions both use the 1098-VLI designation throughout.

Who receives Form 1098-VLI?

Borrowers who paid $600 or more in interest on a qualifying Specified Passenger Vehicle Loan (SPVL) during the tax year receive Form 1098-VLI from their lender. The loan must have been originated after December 31, 2024, and must be secured by a first lien on a new vehicle that underwent final assembly in the United States, weighs under 14,000 pounds GVWR, and was purchased for personal use.

Do I need to itemize to claim the vehicle loan interest deduction?

No. The auto loan interest deduction is available to all eligible taxpayers regardless of whether you take the standard deduction or itemize. You claim it on the new Schedule 1-A (Form 1040), Part IV. The deduction reduces your taxable income but does not reduce your adjusted gross income (AGI).

What is SPVL on Form 1098-VLI?

SPVL stands for Specified Passenger Vehicle Loan - the IRS term defined in IRC §6050AA(d)(2) for the type of auto loan that qualifies for both the lender reporting requirement and the borrower interest deduction. An SPVL is an auto loan originated after December 31, 2024, secured by a first lien on a qualifying new vehicle used for personal purposes. Learn more about how it works in our guide on what the new auto loan interest deduction is and who qualifies.

What happens if my lender sends the wrong form number or uses "1099-VLI"?

Contact your lender and request a corrected statement. The IRS only recognizes Form 1098-VLI (or qualifying alternative statements under Notice 2025-57 for 2025). A document labeled "1099-VLI" is not an official IRS form and should not be used to prepare your tax return. Your lender should issue documentation referencing Form 1098-VLI or clearly describing it as a Vehicle Loan Interest Statement.

What is the deadline for receiving Form 1098-VLI?

For calendar year 2025, lenders must furnish Form 1098-VLI or a qualifying alternative statement to borrowers by January 31, 2026, under IRS Notice 2025-57. Starting with 2026 tax year reporting, lenders must use the official Form 1098-VLI and furnish it by January 31 of the following year. If you have not received your form or statement by February, contact your lender directly.

What if my Form 1098-VLI has errors?

Contact your lender immediately and request a corrected Form 1098-VLI in writing. Common errors include incorrect interest totals, wrong VINs, and origination dates that do not match your loan documents. Do not file your tax return using incorrect form data - the IRS receives a matching copy of your Form 1098-VLI and will flag any discrepancy between your return and what your lender reported.

Does Form 1098-VLI apply to used car loans?

No. Form 1098-VLI and the related interest deduction apply only to new vehicles. The law requires that the vehicle's original use commences with the borrower - meaning the first owner. Used vehicle purchases, regardless of age or condition, do not qualify. Leased vehicles also do not qualify since lease payments are explicitly excluded from the SPVL definition.

Does the deduction apply to electric vehicles?

It can - if the EV meets the US final assembly requirement. Electric vehicles that were manufactured in the United States and meet all other APV qualifications are eligible. However, many popular EV models are assembled outside the US, which disqualifies them. Review our EV auto loan deduction guide to check whether your specific electric vehicle qualifies.

When does the vehicle loan interest deduction expire?

The deduction applies to taxable years 2025, 2026, 2027, and 2028. Per IRC §163(h)(4)(A), the deduction does not apply to taxable years beginning on or after January 1, 2029. Loans originated during the eligible window do not receive any extension beyond 2028 - the deduction stops for all taxpayers after the 2028 tax year.