Based on the latest information we’ve received regarding the One Big Beautiful Bill Act and the provision “No Tax on Car Loan Interest,” this recipe outlines our plans for assisting CUs with generating IRS Form 1098-VLI, starting with the 2026 tax year.
Latest News
Update 9/21/2026:
- CU*Answers is working on getting the form properly formatted per IRS instructions (which could potentially change between now and when we produce the forms). Project#67373 will confirm all appropriate boxes work, and will be implemented in time to produce the tax file at year-end, and to generate the forms during January.
- As for the calculations considering negative equity amounts, refinances, etc., that will need to be tracked by the credit union and the responsibility falls on the credit union member to appropriately report their taxes. We will report interest paid on the loan, but we are not providing any calculations.
- CUs will be able to use tools in CBX to adjust data in the tax file, as usual, once it is created during beginning-of-year processing and before the forms are produced in January.
Update 9/9/2026:
- Project #65769 adds the “Eligible for 1098-VLI” checkbox to the collateral maintenance screen for vehicle type collateral codes, so you can mark eligible loans. That project is in beta testing and will be released to all CUs with the 26.10 release. Project #67373 will handle the creation of the 1098-VLI tax forms as part of year-end processing for any loans with marked collateral, and is currently in development. We are aware that the IRS recently made a final ruling but it does not affect the mechanics of producing the forms.
Previous Announcements
2025 Changes to Taxes on Car Loans – Eligibility Criteria & Updates from the IRS (11/25/2025)
2025 Changes to Taxes on Car Loans – Suggestions to Manage Qualifying Loans (10/2/2025)
2025 Changes to Taxes on Car Loans – Let Us Know What you Need from CU*Answers (8/27/2025)
Our Plan
A recipient of individual interest aggregating $600 or more for the calendar year on a passenger vehicle loan must file an information return reporting the receipt of interest. Under the current guidance, your monthly statements should cover the requirements for tax year 2025. (See our announcement sent Nov 25th for more on that.)
The draft we’ve seen of the new 1098-VLI tax form will require VIN, make, model and year of the vehicle, vehicle loan interest received, loan origination date, and the outstanding principal as of January 1st of the reporting year. We have all of these pieces in place via our account and collateral files. We also already take a snapshot of outstanding principal as of January 1st, every year, for all loans on our system (table name is MBAL1098).
The changes listed below needed to produce the forms are in process:
- Expand existing collateral files to add a new “Eligible for 1098-VLI” checkbox to the collateral screen (will apply to your “Vehicle” definition type codes only)
- New maintenance program to allow adjustments to 1098-VLI tax information file created at year-end
- Program changes necessary to produce 1098-VLI forms, both printed and electronic for archiving
- Program changes to include data when reporting to the IRS
- Add an option to Tool #916 Update Tax Form Handling Instructions so CUs can specify how they want these forms handled
The plan is for this software to be released by the end of the 2026 calendar year and include these forms in our normal year-end tax reporting processes. Exact release date TBD but we will provide adequate time for CUs to flag the appropriate collateral records prior to year-end.
In the Meantime
We recommend you continue using some method to flag qualifying loans, whether that be via a Tracker note (using a special Memo Type code so they are easy to find), or a Custom Membership Field, or even just a separate Excel worksheet. That way when our changes are done, you’ll have something to work from to go through and flag the applicable collateral records.
Chef for this recipe: Karen Sorensen
Hi! Are there any updates on what we are to do with these loans? Our CEO thought it was ready to go, so he wanted me to configure the code or whatever we need to do for this. Are we setting up a new category code like we have for Rec Vehicles 1098? Please let me know any updates!
Thank you!
Tonya Cionek
CFO
Our plan is still the same – to work on this during 2026 and release it in time for 2026 tax forms processing at the end of the year. In the meantime you simply need to come up with a way of tracking which loans you will want to flag. Use a Tracker, or a custom field (using our UDM suite), or an Excel worksheet, whatever works best for you! You do NOT need to do any changes to your products, you’ll simply flag specific loans (actually you’ll flag their collateral record) and when we do tax forms we’ll pick up those loans for the 1098-VLI forms.
I see the new check box in the collateral screen for the 1098-VLI. When will this be active? I started trying to update my loans that qualify but the check box won’t update.
Oops, that appears to be a weird UI glitch based on the beta-testing we’re doing right now for the 26.10 release. It’s not a real field yet, so there’s no place to save your selection. Please ignore it until after the release goes in on October 11! (A CBX alert was published about this on 8/25/2026.)
How would it look for those CU where the loans come from a different LOS? We fund our loans from MeridianLink do that make a difference?
If you’re referring to a loan that’s originated via a third-party LOS, it doesn’t matter. This is a function of servicing the loan, so we are producing a form that reports the amount of interest paid according to your CBX database. You will still need to flag the collateral record on that loan if it is eligible for the 1098-VLI, like any other loan, no matter how the original application was submitted.
If you are referring to an OTB (off trial balance) loan that’s not actually serviced on the CBX core, those forms will need to be generated by your third-party vendor.