Financial Firms: What the Updated Regulation M Requires

Financial firms that originate or service consumer leases have a new number to build into their systems before January 1, 2026. A final rule from the Federal Reserve System, published December 15, 2025 in the Federal Register and cited as 90 FR 57878, raises the dollar threshold that determines which consumer leases fall outside Regulation M's disclosure and advertising rules. Institutions that lease anywhere near the old ceiling need to confirm which side of the new line their contracts now sit on.

This brief walks through what the rule changes, who it reaches, what to check before the effective date, and how the update fits the broader window of federal rulemaking financial firms are tracking this year. It is written for compliance, legal, and operations teams who need the substance of the rule without wading through the full Federal Register notice themselves. The deadline and the underlying obligation come first; everything else is context.

Key Takeaways

• A final rule from the Federal Reserve System (90 FR 57878) raises the Consumer Leasing Act's exemption threshold, effective January 1, 2026.

• The threshold rises from $71,900 to $73,400, based on the annual increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) measured as of June 1, 2025.

• The rule amends 12 CFR Part 213 and 12 CFR Part 1013 — the Federal Reserve's and the Bureau's parallel versions of Regulation M — and carries RIN 7100-AH11.

• Consumer leases priced above the new threshold fall outside Regulation M's disclosure and advertising requirements; leases at or below it remain fully covered.

• A related, annually-required adjustment to the Truth in Lending Act's exemption threshold was finalized in the same Federal Register issue.

What This Rule Actually Does

The Consumer Leasing Act exempts consumer leases above a set dollar amount from Regulation M's disclosure and advertising requirements. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Board and the Bureau — the Federal Reserve System and the Consumer Financial Protection Bureau, acting jointly as "the Agencies" in the rule's own language — to adjust that dollar amount every year by the percentage increase in the CPI-W. This rule, published December 15, 2025 and effective January 1, 2026, is that year's adjustment.

Regulation M implements the Consumer Leasing Act for lease transactions much the way Regulation Z implements the Truth in Lending Act for credit transactions: both set disclosure and advertising rules, and both exempt transactions above a dollar ceiling on the theory that larger, typically commercial-grade transactions involve parties who need less standardized consumer protection. The annual CPI-W adjustment exists so that ceiling keeps pace with inflation automatically, rather than requiring a new rulemaking every time prices rise.

Based on the CPI-W's increase as of June 1, 2025, the Agencies are raising the exemption threshold from $71,900 to $73,400. A consumer lease priced above $73,400 falls outside Regulation M's coverage; a lease at or below that figure stays subject to the disclosure and advertising rules the regulation has always required. Firms that priced leases against last year's $71,900 line need to re-check that math against the new number before the effective date.

The same Federal Register issue finalizes a parallel adjustment to the Truth in Lending Act's exemption threshold, since Dodd-Frank imposes the identical CPI-W adjustment mandate on that threshold too. That companion adjustment is a separate rule with its own figures; this brief covers only the Regulation M consumer-leasing threshold above. Firms that operate under both regimes will generally want to update both figures in the same compliance sweep, even though each is documented in its own rule.

Who Is Affected

Regulation M reaches any person who regularly leases personal property to consumers for personal, family, or household use under a lease that qualifies as a consumer lease. In practice that includes banks and other institutions supervised by the Federal Reserve under 12 CFR Part 213, plus other lessors that fall under the Bureau's parallel rule at 12 CFR Part 1013. Automobile lease financing is the most common example, but the threshold applies to any qualifying consumer lease regardless of the underlying asset.

The threshold matters most at the margin. A lessor offering high-value personal-use leases — for example, leases on premium vehicles or equipment used partly for personal purposes — is exactly where the $71,900-to-$73,400 shift can move a contract from covered to exempt, or the reverse if a lease was priced near last year's line. Lessors whose leases fall well below or well above the threshold in either direction see no practical change from this rule.

Coverage under Regulation M is not a one-time determination — it is checked lease by lease, against whatever threshold is in effect on the date the lease is offered. A firm that offers both consumer and above-threshold commercial-grade leases needs a process that applies the correct number automatically rather than relying on staff to remember which figure is current. Treating a covered lease as exempt because a system still references the old $71,900 line means the required disclosures never reach the consumer — a gap examiners look for specifically after a threshold change like this one.

What Financial Firms Should Do Before the Deadline

The rule gives financial firms until January 1, 2026 to apply the new $73,400 figure. Before that date, the rule requires that any system, form, or disclosure referencing the old $71,900 exemption line be updated so leases are classified correctly from the effective date forward. That includes loan origination systems, lease documentation templates, advertising review checklists, and any internal training material that cites the dollar figure. None of this requires a new compliance program — it requires finding every place the old number is written down and replacing it before the effective date arrives.

• Confirm which CFR part governs the institution — 12 CFR Part 213 or 12 CFR Part 1013 — since both carry the identical threshold.

• Update origination and pricing systems that hard-code the prior $71,900 figure.

• Re-train compliance and sales staff who evaluate whether a lease needs Regulation M disclosures.

• Coordinate with whoever owns Truth in Lending Act compliance, since a parallel threshold adjustment for credit transactions was finalized in the same Federal Register issue.

• Document the changeover date so audit and examination records show exactly when the new threshold took effect.

• Notify any third-party lease-servicing vendor or dealer network that also needs the updated figure.

Operationalizing Threshold Monitoring at Volume

For a firm processing more than a handful of leases a month, a dollar-threshold change like this one is easy to update in one system and miss in another, which is exactly the kind of inconsistency an examiner will flag. US Tech Automations builds this kind of check as a standing agentic workflow rather than a one-time fix: the current threshold is enforced consistently across origination, disclosure, and advertising review, and the workflow updates itself the next time the Agencies publish an adjustment, instead of waiting for someone to notice, months later, that a form still cites last year's number.

How This Fits the Broader Regulatory Window

This rule is one entry in a much larger set of federal compliance obligations financial firms are tracking this year. It sits inside a point-in-time index of 259 U.S. federal rules published July 1, 2024 – July 5, 2026 by 10 agencies governing the industries covered here — a reminder that a single threshold adjustment rarely arrives alone, and that a firm tracking only the rule in front of it is likely missing several others moving on a similar clock.

Annual CPI-W adjustments like this one are also, by design, predictable: the Agencies publish one most years, which means the operational fix described above is not a single project but a recurring one.

Firms that would rather build this kind of threshold monitoring once and reuse it across every future adjustment can review current plans from US Tech Automations.

Frequently Asked Questions

When does the updated Regulation M threshold take effect?

The new threshold takes effect January 1, 2026. Leases offered on or after that date are measured against the $73,400 figure; leases offered before it are measured against the prior $71,900 threshold. The effective date comes directly from the final rule as published in the Federal Register.

What is the new consumer leasing exemption threshold?

The threshold rises to $73,400, up from $71,900, based on the increase in the CPI-W measured as of June 1, 2025. This is a routine annual adjustment, not a change to the underlying Consumer Leasing Act policy.

Which CFR parts does this rule amend?

The rule amends 12 CFR Part 213, the Federal Reserve's version of Regulation M, and 12 CFR Part 1013, the Bureau's parallel version. Firms should confirm which part applies to their institution, since the same $73,400 threshold governs both.

Why does the exemption threshold change every year?

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Agencies to adjust the Consumer Leasing Act's exemption threshold annually by the percentage increase in the CPI-W, so the dollar line moves most years without any change in policy. The same annual mechanism applies to the parallel Truth in Lending Act threshold.

Does this rule also change Truth in Lending Act thresholds?

A related adjustment to the Truth in Lending Act's exemption threshold for consumer credit transactions was finalized in the same Federal Register issue, since Dodd-Frank imposes the same annual CPI-W adjustment mandate on that threshold. That is a separate rule with its own figures.

Where can I read the official rule?

The rule is cited as 90 FR 57878, carries RIN 7100-AH11, and was published December 15, 2025 in the Federal Register. The current regulatory text it amends is available through the eCFR at 12 CFR Part 213 and 12 CFR Part 1013.

Related guidance

For adjacent obligations financial firms are tracking this cycle, see our guides on Truth in Lending Act compliance, Fair Credit Reporting Act disclosures, and the extension of compliance dates for disclosure.

Disclaimer

This article is provided for informational purposes only and does not constitute legal or tax advice. Reading it does not create an attorney-client relationship. Regulatory obligations turn on facts specific to each institution, and the law can change. Before acting on anything described here, consult a qualified attorney or tax advisor who can evaluate your particular circumstances.

Every date, citation, RIN, CFR reference, and figure in this post is copied verbatim from the Federal Register and eCFR as of the snapshot date. Nothing is estimated, modeled, or extrapolated. This is not legal or tax advice.

Last reviewed: July 5, 2026.

Source: U.S. Federal Register (90 FR 57878); current text via eCFR, 12 CFR Part 213; 12 CFR Part 1013.