If you’ve been checking your mailbox for your usual W-2s and 1099s, keep an eye out for a newcomer in January: Form 1098-Auto (officially appearing in some systems as Form 1098-VLI). This brand new tax document is a direct result of the One Big Beautiful Bill Act (OBBBA), and for millions of Americans who financed a vehicle in 2025, it is the golden ticket to a significantly lower tax bill.
Under the new federal mandates, any commercial lender that has received $600 or more in interest on a qualified auto loan during the 2025 calendar year is legally required to provide a statement to the borrower by January 31, 2026. If you financed a US-made car last year, this form is the proof you need to claim OBBBA’s historic $10,000 interest deduction for car loans. Here’s why this form is landing in your mailbox this week and what you should do with it.
The confusion between “1098-Auto” and “1098-VLI”.
As with many new laws, the nomenclature is still not in order. While consumer interest sites and banks refer to it as the 1098-Auto, the IRS draft forms are referred to as 1098-VLI (Vehicle Loan Interest). Regardless of the headline, the purpose is the same: it functions exactly like the Form 1098 you receive for your mortgage interest.
According to IRS Notice 2025-57the government has provided a “transitional exemption” for the 2025 tax year. This means that while some lenders will send you a formal, government-style form, others may send a “simple statement” or provide the information through their online portal. As long as the document clearly states the total interest paid and the vehicle’s chassis number, it is valid for your 2026 application.
Why €600 is the ‘magic number’
You may be wondering why you received a form for your truck, but not for your spouse’s sedan. The OBBBA reporting requirement is only triggered when a borrower pays at least $600 in interest during the tax year. As noted by EY Tax AuthoritiesWith interest rates hovering between 6% and 9% for many buyers in 2025, it won’t take a huge loan to reach that $600 threshold.
If you had a $30,000 loan with 7% interest, you probably paid more than $2,000 in interest in the first year alone. If your interest was less than $600, your lender does not need to send the form, but you may still be able to deduct the interest. You only have to calculate this yourself based on your monthly statements.
The 3 crucial boxes to check
When your 1098 Auto arrives, don’t just hand it over to your tax preparer. You need to check three specific boxes to ensure you don’t trigger an automatic IRS flag:
- Box 1 (interest received): This is the amount you enter in your tax return. It should reflect interest only, and not principal or late fees.
- Box 2d (VIN): The 17-digit vehicle identification number must be present. The IRS uses this to verify that the car was “finally assembled” in the United States.
- Box 3a (date of origin): The loan must have arisen after December 31, 2024. If your lender accidentally reports a loan from 2024, the Tax Authorities AI will reject the deduction.
Power ‘above the line’
The reason the 1098-Auto is so valuable is that the interest deduction for auto loans is “above the line.” Unlike most deductions that require you to have a huge stack of receipts to beat the standard deduction, this one is available to everyone. According to H&R blockyou can claim this even if you take the standard deduction.
By using the information on your 1098-Auto to complete Schedule 1-A, you directly reduce your adjusted gross income (AGI). This can have a ‘waterfall effect’, potentially making you eligible for other credits (such as the child tax credit or the income tax credit) that you might otherwise have eliminated.
What if the form does not arrive?
Lenders have until midnight January 31 to postmark these forms. If you haven’t seen yours by February 10, your first step should be to log into your auto lender’s website and view the “Tax Documents” or “Statements” section. Because 2026 is the first year this requirement will be in effect, many smaller credit unions and regional banks are struggling with the new software.
If Jackson Hewitt advises that if your lender does not provide a form, you can still claim the deduction by using your latest monthly statement for December 2025, which should show ‘Year-to-Date Interest Paid’.
Don’t file too early
The 1098-Auto is a powerful tool for savings for the middle class in 2026, but it is also a brand new system. If you file your tax return in mid-January before this form arrives, you could miss out on a deduction worth thousands of dollars. Wait for the 1098-Auto, verify the VIN, and make sure your lender won’t let you down. This little piece of paper is the key to turning your car payment into a tax refund.
Did you receive a 1098-Auto this week, or is your lender claiming they “don’t have to send one”? Leave a comment below and let’s hold these banks accountable for the 2026 tax rules.
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