On July 4th, 2025, President Trump signed into law the One Big Beautiful Bill Act (BBB) containing several tax provisions. While the BBB is U.S. legislation, there are several items that reach beyond U.S. borders and may affect certain Canadians. Here is a summary of such key issues.
Estate Tax
The 2025 U.S. estate tax exemption is USD $13.99 million but was set to revert to lower amounts in future years. The BBB permanently increased the exemption to USD $15 million (indexed annually to inflation).
- U.S. citizens will be exempt from U.S. estate tax upon death so long as the value of their estate is below the threshold.
- Non-U.S. citizens holding U.S.-situs property, such as U.S. real estate or U.S. securities, are subject to U.S. estate tax upon death. If the value of these individuals’ worldwide estate is below the threshold, they will generally not be subject to any U.S. estate tax as a prorated exemption amount can be applied in accordance with the Canada-U.S. Tax Treaty.
High-net-worth individuals who were previously planning around the expected reduction in the estate tax exemption should refresh their plans to take into account the new exemption amount.
Bonus Depreciation
Bonus depreciation allows an accelerated write-off of to certain short-lived property (i.e., excluding real property). The old rules allowed a 100% deduction up until 2022 when the percentage decreased by 20% per year (to 0% after 2026). The BBB reinstates bonus depreciation at 100%, which will apply to qualified property purchased before 2029.
Canadian businesses operating U.S. subsidiary corporations can benefit from an immediate write-off of the purchase of qualified property.
GILTI
Under existing U.S. tax rules, certain U.S. citizens who own more than 10% of the shares of a Canadian corporation may be subject to U.S. (personal) tax based on the imputation of income earned within the corporation. This regime, known as Global Intangible Low-Taxed Income (“GILTI”), is intended to discourage and disincentive U.S. individuals (and U.S. corporations) from operating non-U.S. corporations and sheltering income from personal-level U.S. taxation.
The nuances of this regime are beyond the scope of this article. But under existing rules, U.S. shareholders would generally be exposed to “GILTI” tax to the extent the Canadian corporation paid less than 13.125% Canadian corporate tax. The BBB updated the technical rules of this regime which effectively increased this rate to $16.406%.
All else being equal, U.S. citizens that own Canadian corporations and are subject to the GILTI rules now have increased exposure to U.S. tax, especially if their Canadian corporate taxable income is $500,000 or less and are subject to a tax rate of only 12.2%.
GG Observations
If you are a U.S. citizen or have cross-border activity, it is important to understand how U.S. tax rules can impact your bottom line. Our team stands ready to help you assess how these changes may impact you.
