Changes to Information Reporting Requirements Under the One Big Beautiful Bill Act (OBBBA)

By Adam Aucoin September 15, 2025

The One Big Beautiful Bill Act (OBBBA) introduces significant new reporting requirements for auto loans, which are crucial for both lenders and borrowers to understand. Additionally, the act modified the reporting thresholds for Forms 1099 and made changes to Form W-2 reporting. These changes could result in new or additional procedures banks (and other taxpayers) need to consider and, in some instances, understand and implement for their year-end information reporting processes. 

Key changes in 1099-K reporting 

Under the OBBBA, the 1099-K threshold reverts to pre-2024 levels, which means that the threshold is set at $20,000 and 200 transactions. This provision is effective for payments made in 2025 and beyond. 

Additionally, the 1099-MISC and 1099-NEC reporting thresholds have been increased from $600 to $2,000, beginning with 2026 forms (not 2025) and these thresholds will be indexed for inflation going forward. This adjustment aims to reduce the reporting burden on smaller transactions while ensuring that significant transactions are still reported. This should result in fewer 1099s needing to be filed as the $600 threshold has been around for decades (in fact, had it been indexed for inflation since inception, it would be over $5,000!).  

Please note this describes a change in federal reporting obligations. States still may have their own separate reporting guidelines that should be reviewed and considered. 

Auto loan interest deductions 

Section 6050AA of the OBBBA amended IRC Section 163(h) to allow individuals to deduct interest on certain car loans for calendar years 2025 through 2028. To substantiate this deduction, lenders are required on an annual basis to report interest payments received totaling $600 or more during any of those calendar years.  

For auto loan reporting, banks and other lenders must include specific information to comply with the new regulations. This information includes: 

• the name and address of the individual from whom the interest was received; 

• the amount of interest received for the calendar year; 

• the amount of outstanding principal on the specified passenger vehicle loan as of the beginning of the calendar year; 

• the date of origination of the loan; 

• the vehicle year, make, model, and VIN; and 

• any other information that the Treasury Secretary may prescribe. 

Some purchasers will be unable to utilize the deduction because it will be phased out if taxpayers’ incomes exceed certain thresholds. However, the seller must provide the required documentation as long as the loan, and the vehicle itself, meet certain criteria, such as: 

• The loan must be for personal use and have originated after December 31, 2024 
• It must be for a vehicle weighing less than 14,000 pounds, and the vehicle must be new, meaning the borrower is the first owner. 
• Additionally, the loan must be secured by a lien on the vehicle. 

These changes and items required to be reported could be tricky for auto lenders to track as well. How do you track the vehicle information? How do you track whether the vehicle meets qualifications such as final assembly being in the U.S.? How do you track if the vehicle is for personal or business use? Obtaining the required information and detailed documentation will be crucial. 

Form W-2 reporting changes 

The One Big Beautiful Bill Act (OBBBA) introduces changes to Form W-2 reporting requirements. One of the key modifications is the inclusion of detailed reporting for overtime wages and tips (tips are not new per se but reporting for tipped occupations eligible for the deduction is new). 

Employers will now be required to separately report overtime wages and tips on Form W-2, ensuring that these earnings are clearly distinguished from regular wages. This change aims to provide greater transparency for tips and overtime wages that could be deductible by employees under new rules.  

The IRS has released a draft version of the 2026 Form W-2, which includes new boxes and codes for reporting qualified tips and overtime compensation. The draft form introduces a new box (14b) labeled “Treasury tipped occupation code,” which employers will use to report the Treasury Occupation Code for tipped occupations. Additionally, box 12 includes two new codes: “TP” for the total amount of qualified tips and “TT” for the total amount of qualified overtime compensation. 

These changes are set to apply to W-2 forms issued for the 2026 tax year, although the provisions for tips and overtime pay are effective for the 2025 tax year. The IRS has stated that it will provide transition relief for the 2025 tax year. 

Next steps from here 

The introduction of new boxes and codes on 2026 Forms W-2; new rules regarding 2025 1099-K, 1099-MISC, and 1099-NEC forms; and 2025 new auto loan interest reporting (using a form/format not yet known) represent significant changes and create the need for clear mechanisms to track qualified overtime wages, qualified tip wages, auto loan interest and other items. 

All banks and other impacted taxpayers should review their current information and payroll documentation processes to determine what needs to be put in place to ensure proper reporting and compliance. 

For more information, please contact Adam Aucoin or your BNN tax advisor at 800.244.7444. 

BNN’s banking and financial services team can help financial and lending institutions understand these changes and impacts they may have on a bank’s internal processes and reporting. Reach out to our team to learn how we can help you navigate complex industry tax and accounting regulations.