If you or your loved ones have any financial or personal ties to the United States (like property, investments, US citizenship or residency) you’ll want to be aware of some major tax and legal changes currently unfolding south of the border.
The US House of Representatives recently passed the “One Big Beautiful Bill”, a sweeping tax package that affects everything from income taxes to estate planning. While it still needs Senate approval, it could make a big difference in how Canadian families with US connections manage their finances.
Key Highlights for Canadians to Watch:
Estate and Gift Tax Exemption May Drop:
The current US estate tax exemption is nearly $14 million USD, but it’s scheduled to shrink by half in 2026 unless new laws are passed. That could mean more US tax exposure for high-net-worth families with US assets or beneficiaries. If you’re planning to pass on wealth to US family members, you may want to act soon to take advantage of the current rules.
New Surtax on Certain Foreign Income:
A new proposal (Section 899) would apply extra tax to income earned from the US by people or trusts in countries the US sees as having “unfair tax rules”—potentially including Canada. The surtax could reach up to 20%, with potentially punitive withholding rates of up to 50%. This could impact Canadians who invest in US real estate or receive US-sourced income through trusts.
IRS Gets Stricter on Trusts & Gifts:
US beneficiaries of Canadian trusts could face new tax reporting rules, especially if they use trust-owned property like vacation homes. A new IRS ruling also limits the “step-up” in asset values when a US person inherits from a foreign trust—so proactive planning is essential.
Reporting Obligations Expand:
There are new (and stricter) reporting requirements for foreign gifts, trust distributions, and even US property used by Canadians with US status.
What Should You Do?
If you or a family member is a US citizen, green card holder, or owns US assets, now is the time to review your estate and tax plans. These rules are complex and still evolving, so speaking with a cross-border tax advisor is more important than ever.
At Mills & Mills LLP, our lawyers regularly help clients with a wide range of legal matters including business law, real estate law, estate law, employment law, health law, and tax law. For over 140 years, we have earned a reputation amongst our peers and clients for quality of service and breadth of knowledge. Contact us online or at (416) 863-0125. The material provided through the Mills & Mills LLP website is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.
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