Cornerstone League Submits Comment Letter on IRS Car Loan Interest Deduction Proposal

Cornerstone League submitted a comment letter to the U.S. Department of Treasury regarding proposed regulations implementing the federal car loan interest deduction (IRS REG-113515-25).

In its letter, Cornerstone expressed support for the goal of providing targeted tax relief to consumers while outlining several concerns about the proposal’s operational and compliance impact on credit unions. The League emphasized that auto lending is a core service for credit unions and that certain requirements could create unintended barriers for lenders and borrowers alike.

Key concerns included the proposal’s treatment of negative equity in vehicle trade-ins, which Cornerstone noted would be operationally difficult for lenders to separate for interest reporting purposes. The League also highlighted challenges tied to new information-reporting requirements, particularly for loans originated through indirect channels, and urged the agencies to provide transition relief, safe harbors, and clearer guidance to ensure workable implementation.

Cornerstone encouraged Treasury to refine the proposal to reduce compliance burden while preserving consumer access to the deduction.

Read the full comment letter.

If you have questions about this letter, please contact Suzanne Yashewski at 512-853-8516 or syashewski@cornerstoneleague.coop.