In June, the federal legislature passed the tax reconciliation bill known as House Resolution 1 (H.R. 1). Since the passage of the bill, credit unions have been put in the position of helping members take advantage of some provisions while implementing additional opportunities that the bill allowed.
In order to help credit unions navigate some of the provisions of the bill, we’ve revisited a couple of the topics.
A temporary tax deduction for passenger vehicle loan interest as well as particular reporting requirements for businesses receiving $600 or more on qualifying vehicle loans was one provision of H.R. 1. The tax deduction is available for the tax years 2025 – 2028. Credit unions are encouraged to review the IRS Transitional Guidance.
Financial institutions should know that, for the purposes of the deduction and for reporting purposes, the requirements of the provision apply to any applicable loan made after December 31, 2024. To be clear, the tax deductions are for consumers, which means credit unions may need to be prepared for their members to ask for tax documents. Additionally, since the reporting requirements apply to qualifying loans made after December 31, 2024, credit unions may have already issued qualifying loans.
A passenger vehicle loan is a first lien secured by a passenger vehicle that is for personal use. The bill defines a passenger vehicles as any vehicle:
Additionally, the bill specifically excludes any vehicle whose final assembly did not occur within the United States.
So, for the purposes of the tax deduction and reporting purposes, a passenger vehicle loan is a first lien for the purchase (must be new) of a vehicle for personal use.
According to IRS guidance, taxpayers and financial institutions can use the vehicle identification number (VIN) to determine whether a vehicle has undergone final assembly in the United States. The IRS has provided the National Highway Traffic Safety Administration’s (NHTSA) VIN Decoder to help determine whether a vehicle’s plant and manufacture was within the U.S.
To be clear, the filer of the credit is responsible for determining final manufacture, not the financial institution.
Consumers are permitted to take an “above-the-line” tax deduction for qualified passenger vehicle loan interest for tax years 2025-2028. This means, a taxpayer can take the deduction even if they are taking the standard deduction and not itemizing.
Financial institutions that do not provide separate tax services should refer consumer tax questions to a qualified professional.
Credit unions will be required to remit a form, likely to be similar to a 1098 or 1099 to the IRS. This qualification will apply to any financial institution who has received $600 or more in interest from qualifying loans (passenger vehicle loans). The bill directs the Secretary of Treasury and the IRS to develop the correct form which, to date, has not yet been made available to the public. In addition to submitting a form to the IRS, financial institutions are required to send a written statement to the borrower.
Both the form and the statement are required to contain the following information:
Financial institutions should be advised that the written statement must also contain the contact information for the financial institution that made the loan.
Credit unions should begin to review vehicle loans made throughout this past year. Since the bill is retroactive and close to the end of the year, credit unions should understand which vehicle loans may qualify for reporting and which ones may not. Additionally, since written statements are required to be sent to borrowers, credit unions should begin to develop documentation to be sent out.
As the deduction is available for a period of three years, credit unions also need to determine how to know when a qualifying loan may be subject to reporting requirements during the lending process. This may include changes or updates to policies and procedures.
Finally, financial institutions should be on the lookout for form publication from the IRS to complete the reporting requirements.
The Big Beautiful Bill signed into law by President Trump on July 4, 2025, contained hundreds of provisions including the creation of what is dubbed as the soon availability of Trump Accounts (accounts). Although with its own distinct parameters, the accounts at core design resemble existing products such as Roth IRAs and 529 plans, and credit unions can begin offering these accounts beginning January 1, 2026. The new accounts have received both praise and criticism from the media, politicians, and financial planners, and while the initiative is still in its initial stages, it is expected the US Treasury Department and IRS will soon issue guidance. Here is what we know for now.
These accounts may present credit unions a new avenue to engage families, beginning at a child’s birth, and foster long-term relationships. However, like consideration of other new products, successful launch (or not) hinges on the assessment of inherent risks and availability of controls, operational preparedness, consumer and staff education, competitive differentiation, and responsiveness to equity and market concerns. Credit unions that design compliant offerings could capture meaningful member relationships and support core credit union missions, such as education and financial growth and inclusion.
However, launching these accounts is not without the necessity for a thoughtful risk assessment process (as with any new product or service) and overall determination of whether the product aligns with the overall strategy and risk profile of the credit union.
Key features include but are not limited to:
Considerations/Potential Challenges
While the benefits may seem clear, so too are the potential challenges such as:
If your credit union is considering a rollout of the accounts in 2026, we recommend reviewing the joint guidance issued by the U.S. Internal Revenue Service (IRS) and the U.S. Department of the Treasury. The guidance includes commonly asked questions and answers that were provided by both government agencies.
Have questions or want to know more? Contact ViClarity’s Compliance Services team at compliancesupport@viclarityus.com.
(Authored by ViClarity)
For more information, email Heather Line.
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