On February 2, 2026, California and Nevada’s Credit Unions submitted a comment letter to the Internal Revenue Service (IRS) and the U.S. Treasury Department regarding proposed regulations implementing new auto-loan interest reporting requirements enacted under H.R. 1, the One, Big, Beautiful Bill Act.

The legislation, passed in July 2025, created a temporary tax deduction for qualified passenger vehicle loan interest and, for the first time, requires lenders to report detailed vehicle-loan information to the IRS. While intended to provide consumer tax relief, these provisions extend federal information reporting into vehicle lending in a way that is unprecedented and operationally complex for credit unions, particularly given the accelerated implementation timeline.

In its letter, the California and Nevada leagues emphasized strong support for policies that promote consumer affordability and responsible vehicle financing, while raising concerns about several aspects of the proposal that are unworkable in practice. Key issues included the inability of loan-servicing systems to allocate interest between qualifying and non-qualifying loan components, restrictions that could discourage consumer-friendly refinances, requirements to verify facts lenders cannot reasonably access (such as original vehicle use), VIN accuracy and assembly-location verification risks, and provisions that effectively shift tax eligibility determinations from taxpayers to financial institutions.

California’s Credit Unions and Nevada’s Credit Unions urged the IRS to adopt administrable safe harbors and clarifications to reduce compliance risk, prevent borrower confusion, and ensure the rules do not undermine the intended consumer benefits.

You can read California and Nevada’s Credit Unions’ comment letter here.