The Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau announced final rules on December 15, 2025, amending the official interpretations of Regulation Z, which implements the Truth in Lending Act. This adjustment raises the dollar threshold for exempt consumer credit transactions from $71,900 to $73,400, effective January 1, 2026. The change reflects a 2.1 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1, 2025, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. This threshold determines when certain credit transactions are exempt from TILA's disclosure and protection requirements, impacting lenders and borrowers in transactions above this amount. The agencies also noted parallel adjustments for consumer leases under the Consumer Leasing Act in a separate Federal Register entry.
Background and Legal Framework
The Truth in Lending Act, enacted in 1968, aims to promote informed use of consumer credit by requiring disclosures about terms and costs. Regulation Z, jointly administered by the Federal Reserve Board and the CFPB, implements TILA. Prior to the Dodd-Frank Act of 2010, the exemption threshold for consumer credit transactions was $25,000. The Dodd-Frank Act raised this to $50,000 effective July 21, 2011, and mandated annual adjustments based on the CPI-W, a measure of inflation affecting urban wage earners and clerical workers, which covers about 30 percent of the U.S. population.
Section 1100E of the Dodd-Frank Act specifies that the threshold must be adjusted annually by the annual percentage increase in the CPI-W as of the preceding June 1. The agencies' rules, including a 2011 final rule by the Board and subsequent joint rules, established the calculation method. Increases are rounded to the nearest $100. If there is no increase or a decrease in the CPI-W, the threshold remains unchanged, with future adjustments based on a baseline that accounts for prior fluctuations.
The CFPB assumed primary rulemaking authority for TILA from the Federal Reserve in 2011 under Title X of Dodd-Frank, though the Board retains authority for certain motor vehicle dealers. This division ensures consistent application across entities.
Calculation of the 2026 Adjustment
The 2026 threshold is derived from CPI-W data reported on May 13, 2025, reflecting April 2025 conditions. The index showed a 2.1 percent rise from April 2024 to April 2025. Applying this to the prior threshold of $71,900 yields $73,409.90, which rounds to $73,400 under the established methodology.
The agencies' official interpretations, found in supplements to 12 CFR Parts 226 and 1026, now include a new comment stating that from January 1, 2026, through December 31, 2026, the threshold is $73,400. This continues a pattern of annual updates: for instance, the threshold was $58,300 in 2021, rose to $61,000 in 2022, and has increased steadily with inflation. The rules exempt transactions above the threshold unless secured by real property or a principal dwelling, or involving private education loans.
A 2016 joint rule memorialized the adjustment process, ensuring thresholds keep pace with inflation without annual recalculations if the CPI-W declines. The agencies bypassed notice-and-comment under the Administrative Procedure Act, deeming the changes technical and non-discretionary.
Implications for Creditors and Consumers
For creditors, the higher threshold means more transactions qualify for exemption from TILA requirements, such as detailed disclosures on terms, fees, and rates. This applies to open-end credit like credit cards and closed-end loans, provided they exceed the threshold at origination or via firm commitment. However, adding a security interest in a principal dwelling post-origination may trigger rescission rights under TILA.
Consumers benefit from TILA protections in smaller transactions but lose them in larger ones, potentially reducing transparency in high-value credit. Exemptions do not apply to mortgages or home-secured loans, preserving safeguards there. The parallel Consumer Leasing Act adjustment ensures consistency for leases over $73,400.
Regulatory analyses confirm no significant economic impact, with no new paperwork burdens or flexibility concerns for small entities, as the rule is exempt from typical reviews.
Perspectives on the Adjustment
Stakeholders view these adjustments differently. Consumer advocates, such as those from the Consumer Federation of America in past comments on similar rules, argue that inflation-based thresholds maintain TILA's protective scope without eroding coverage over time. Industry groups, including the American Bankers Association, support the exemptions for reducing compliance burdens on larger transactions, where borrowers may have greater sophistication.
Critics note that tying adjustments solely to CPI-W, which focuses on urban workers, might not fully reflect broader economic pressures. However, the Dodd-Frank mandate limits discretion, ensuring predictability. No legal challenges have arisen to recent adjustments, unlike broader TILA disputes such as those in Supreme Court cases like Household Credit Services v. Pfennig (2004), which clarified Regulation Z interpretations.
The forward-looking conclusion considers ongoing inflation trends and potential legislative changes. Annual adjustments will continue based on CPI-W data, with the next review in mid-2026. If inflation persists, thresholds could rise further, expanding exemptions. Challenges may include economic volatility affecting CPI-W or congressional revisions to Dodd-Frank. Debates persist on balancing consumer protection with regulatory efficiency, particularly as credit markets evolve with digital lending. Regulators may monitor compliance through supervision, while stakeholders track implications for access to credit.
