What Canadian High Net Worth Families Should Know About the U.S. One Big Beautiful Bill

What changed?

Does this affect Canadians?

Yes, if you own U.S. property or other U.S.-based assets (real estate, business interests, or stocks).

Advantage

You may be able to pass on U.S. assets tax-free, (but only while the exemption lasts).

Limitation

Canadian tax still applies at death, and U.S. rules can change after the next election.

Planning Tip

Consider gifting or restructuring U.S. assets now to take advantage of the higher threshold before it possibly expires in 2026.

Ask Yourself

• Do I own U.S. real estate or investments?
• Will my estate face U.S. taxes?

What Changed?

Does this Affect Canadians?

Only if you are paying for U.S.-related advisory services or operate a U.S. trust/entity.

Advantage

You can still deduct these costs through U.S. businesses or trusts if structured properly.

Limitation

If paid personally, they are no longer deductible under U.S. tax law, increasing your effective cost.

Planning Tip

Consider paying U.S.-based planning fees through a corporate or trust structure where they may still be deductible.

Ask Yourself

Are my U.S.-based planning costs structured efficiently for tax purposes?

What Changed?

The bill relaunches and expands Opportunity Zones, which allow investors to defer capital gains by reinvesting in designated areas, which now include rural zones. Holding the investment long enough may result in partial or full tax exemption on future gains.

Does this Affect Canadians?

Advantage

Limitation

The CRA may not recognize the deferral, meaning you could still owe Canadian tax now.

Planning Tip

Before investing, confirm whether the CRA will recognize the deferral or exemption, and if the structure fits your long-term goals.

Ask Yourself

Will I still owe Canadian tax on my U.S. investments?

What Changed?

U.S. taxpayers can write off 100% of the cost of big-ticket purchases, meaning businesses and individuals can immediately deduct the full cost of qualifying assets (e.g. equipment, aircraft, machinery) in the year they are placed in service. This measure is effective January 19, 2025.

Does this Affect Canadians?

Yes, if you own or lease U.S. business assets or equipment.

Advantage

Big U.S. tax savings in the year of purchase, improving cash flow and ROI.

Limitation

Planning Tip

Align U.S. and Canadian depreciation where possible; consider asset ownership structure carefully.

Ask Yourself

Is my business taking full advantage of these write-offs without causing Canadian tax issues?

What Changed?

Previously, U.S. tax rules limited business interest deductions to a percentage of EBITDA (earnings before interest, taxes, depreciation, and amortization). Now, it’s based on EBITA, excluding depreciation from the calculation, making more interest deductible.

Does this Affect Canadians?

Yes, if you own a business in the U.S. or borrow funds through a U.S. structure.

Advantage

You can deduct more interest in the U.S., reducing taxable income.

Limitation

CRA might not allow the same deductions, risking double taxation.

Planning Tip

Clearly separate and document interest tied to U.S. income.

Ask Yourself

Are my business loans properly allocated for both tax systems?

What Changed?

This 20% deduction originally limited to some U.S. taxpayers, is now expanded to more types of income and higher income brackets. It applies to pass-through income from eligible U.S. businesses.

Does this Affect Canadians?

Yes, if you own or earn income through a U.S. LLC, partnership, or similar entity.

Advantage

Potential 20% tax break on eligible U.S. income.

Limitation

This income is still fully taxable in Canada, which may cancel out the U.S. benefit.

Planning Tip

Run a cross-border tax simulation before claiming this benefit. Coordinate your entity structure and compensation strategy to ensure you qualify and avoid duplication of tax.

Ask Yourself

Is the U.S. deduction worth it once I factor in Canadian taxes?

What Changed?

The capital gains tax exclusion on QSBS is now more generous: investors can exclude up to $15 million USD in gains from federal tax if they invest in qualifying U.S. startups and hold the shares for five years.

Does this Affect Canadians?

Yes, if you invest in qualifying U.S. early-stage companies.

Advantage

Tax-free gains in the U.S. after five years could be substantial.

Limitation

Canada may still tax the gains unless careful planning is done.

Planning Tip

Clarify with your advisor whether Canada will recognize the exemption or how to minimize double taxation.

Ask Yourself

• Will I benefit more from a Canadian or U.S. investment structure?
• Can I benefit from the U.S. tax break without creating a larger Canadian tax bill?

What Changed?

The bill raises the cap on state and local tax deductions to $40,000 USD through 2029 (up from $10,000 USD), but only for households earning under $500,000 USD.

Does this Affect Canadians?

Yes, if you file U.S. taxes and pay state/local tax (e.g. a U.S. rental property or partnership).

Advantage

Larger deductions reduce U.S. income tax.

Downside

This cap is temporary, and the CRA doesn’t recognize the deduction, only foreign tax credits.

Planning Tip

Look into whether your structure (e.g. using a U.S. entity) allows you to benefit more fully from the deduction.

Ask Yourself

• Are my U.S. tax filings optimized to make use of this change?
• Are we paying state taxes that could be reduced under the new cap?