With the enactment of the “Big Beautiful Bill” on July 4, 2025, cross-border taxpayers—particularly those navigating Canadian and U.S. tax and estate planning systems—face major legislative changes. These changes are reshaping the individual, estate, business, and international tax landscape, with far-reaching implications for planning, compliance, and long-term strategy.
At Cardinal Point Wealth Management, we specialize in helping Canadian and U.S. families navigate complex cross-border tax, estate, and financial planning needs. Below, we explore the most important updates under the Big Beautiful Bill and how they impact individuals, estates, corporations, and international structures.
Overview: The Big Beautiful Bill at a Glance
The Big Beautiful Bill is one of the most consequential U.S. tax reform efforts in recent history. Its provisions touch on nearly every area of tax law, from personal income and capital gains to corporate tax rates, international taxation, and estate tax thresholds.
The bill introduces:
- Lower personal tax rates and expanded standard deductions
- A higher estate and gift tax exemption
- Significant corporate tax changes, including immediate expensing, promoting investment in the U.S.
While the bill is designed to stimulate investment and simplify parts of the tax code, it also introduces complexity for cross-border taxpayers who must navigate both Canadian and U.S. tax rules.
Individual Tax Changes
Extension of TCJA Rates and Brackets
The Bill makes permanent the individual tax rates introduced under the 2017 Tax Cuts and Jobs Act (TCJA), which were previously scheduled to sunset after 2025. These include:
- Seven federal tax brackets (10%, 12%, 22%, 24%, 32%, 35%, and 37%)
- Larger bracket thresholds indexed using Chained CPI
There is also a larger inflation increase for the 12% and 22% federal tax brackets.
Impact:
For U.S. citizens in Canada, this extension prevents a reversion to higher pre-TCJA rates and preserves current U.S. tax obligations, which continue to be offset in Canada via foreign tax credits.
Standard Deduction and Elimination of Personal Exemption
The standard deduction is increased to $15,750 (single), $31,500 (married filing jointly), and $23,625 (head of household) for 2025 (indexed annually afterwards). The personal exemption remains at $0 permanently. Itemized deduction rules stay the same:
- Pease limit (3% reduction in itemized deductions) permanently repealed
- Misc itemized deductions permanently repealed
- Deduction for interest on mortgages permanently capped at $750k principal
Pass-through entity taxes (PTETs), where business owners effectively pay their State and Local Tax (SALT) taxes through their business instead of personally as a way to get around the SALT deduction cap, remain the same.
Impact:
U.S. citizens residing in Canada must plan for reduced deductions if previously relying on exemptions. The enhanced standard deduction may help mitigate the loss.
State and Local Tax (SALT) Deduction Cap
For the 2025 to 2029 tax years, the SALT cap increases to $40,000 Married Filing Joint (MFJ) but phases back down to $10,000 for high-income taxpayers above $500,000 (MFJ) at a reduction of 30% of income. Thus, the extra SALT deduction is fully phased out at $600k Adjusted Gross Income (AGI) (MFJ), making the $500k-$600k income range extremely important from a planning perspective for those with high SALT. Absent any other factors, increasing AGI from $500k to $600k means taxable income could rise by $130k, or a federal marginal tax rate of ~46%. The $40k SALT cap and $500k income threshold are to be indexed at a rate of 1% per year.
Foreign real property taxes remain non-deductible.
Impact:
Canadian residents with U.S. income or properties may still face a deduction cap. This change is more impactful for U.S. citizens in high-tax U.S. states, and planning for those with income between $500k-$600k is very important from 2025 to 2029. U.S. residents in high-tax states will need to consider the SALT deduction cap if they are considering roth conversions above $500k AGI.
Additional Standard Deduction for Seniors (>65)
The Big Beautiful Bill provides an additional standard deduction of $6,000 per individual over age 65, but phases out by 6% of Modified Adjusted Gross Income (MAGI) above $150k MFJ ($75k others). This is effective from 2025 to 2028.
Impact:
Older cross-border taxpayers may benefit from this age-based increase, improving after-tax income in retirement years.
Limit on Itemized Deductions
The bill establishes a new permanent limit on itemized deductions, effective in tax year 2026. This limitation applies to filers with taxable income that exceeds the 37 percent ordinary rate threshold ($751,600 MFJ for 2025) for their filing status and reduces allowable itemized deductions by 2/37 of the amount by which taxable income exceeds this threshold (or the total amount of itemized deductions, whichever is smaller.
Impact:
High-income U.S. citizens in Canada who itemize (e.g., for SALT, mortgage interest, and/or charitable contributions) may see reduced deductions. Planning is needed to optimize timing, and annual tax projections should be completed.
Charitable Deduction for Non-Itemizers
The legislation introduces a permanent above-the-line charitable deduction of up to $2,000 (MFJ) or $1,000 (all other filers), even for those taking the standard deduction.
Impact:
This encourages continued charitable giving by U.S. persons abroad and offers modest tax relief without itemizing.
Child Tax Credit
For 2025, the Child Tax Credit is increased to $2,200 (from $2,000) per qualifying child and is permanently indexed for inflation. The refundable portion remains $1,400. The credit requires a valid Social Security Number (SSN) for the child and the taxpayer.
Impact:
Dual-status families or U.S. citizens married to Canadian spouses may find eligibility more difficult, particularly if SSNs are not obtained.
Alternative Minimum Tax (AMT)
AMT exemption amounts are made permanent, while phase-out thresholds are modified. For example, the phase-out for joint filers will revert to $1,000,000, and the rate at which exemptions phase out increases to 50% (from 25%).
Impact:
High-income U.S. citizens in Canada may face new exposure to U.S. AMT. Therefore, annual tax modeling is essential.
Other personal tax changes include:
- The repeal of several Inflation Reduction Act green energy tax credits primarily aimed at individuals, such as electric vehicle and residential energy efficiency credits, after 2025.
- Allow a temporary above-the-line deduction of up to $25,000 in tip income for individuals working in traditionally tipped industries, available for tax years 2025 through 2028. The deduction phases out at 10% of income exceeding $150,000 ($300,000 for joint filers).
- Temporarily allow a deduction—available to both itemizers and non-itemizers—for interest on auto loans used to purchase new vehicles with final assembly in the United States, for tax years 2025 through 2028. The deduction is capped at $10,000 and phases out at a rate of 20% for incomes above $100,000 (single) or $200,000 (joint).
Estate and Gift Tax Changes
Increased Lifetime Exemption
The lifetime estate, gift, and Generation Skipping Tax (GST) exemption increases to $15 million (from $13.99 million in 2025), indexed for inflation from 2026 onwards. This eliminates the scheduled reversion to ~$7 million in 2026.
The lifetime exemption is still portable, so effectively $30 million per couple starting in 2026.
Impact:
U.S. citizens in Canada and Canadians with U.S.-situs assets (e.g., U.S. real estate) can take advantage of a higher threshold. However, Canadian residents still face the $60,000 threshold for non-resident U.S. estate tax filings, though they may claim a pro-rata unified credit under the Canada–U.S. Tax Treaty to eliminate any U.S. estate tax actually payable.
Permanency and Planning Window
The increased lifetime exemption increase is labeled “permanent,” but future Congresses can reverse this. Early lifetime gifts can remove appreciation from taxable estates.
Impact:
For cross-border families, using the exemption sooner can lock in benefits and reduce uncertainty.
Business Tax Changes
100% Bonus Depreciation Reinstated
The Bill makes 100% bonus depreciation permanent for qualified property, including real property used in production, placed into service after January 20, 2025.
Impact:
Cross-border businesses should time capital investments to maximize deductions and match depreciation schedules between jurisdictions.
Qualified Business Income Deduction (QBID)
The 20% Qualified Business Income Deduction (QBID) under Section 199A is made permanent. It applies to income from pass-through entities like partnerships, S corporations, and sole proprietorships.
There is an increase phase-in range of limitation by $50,000 for non-joint returns and $100,000 for joint returns; create a minimum deduction of $400 for taxpayers with $1,000 or more of Qualified Business Income (QBI).
Impact:
U.S. citizens in Canada with U.S. business income through eligible entities can continue to benefit, subject to wage and property limitations. Careful coordination with Canadian business income reporting is essential.
Expansion of Qualified Small Business Stock (QSBS) Gain Exclusion
The Bill enhances the benefits and expands eligibility for the QSBS gain exclusion by increasing the dollar ($10M to $15M, indexed annually) and asset cap ($50M to $75M, indexed annually).
The Bill introduces a tiered system for QSBS exclusion based on the holding period: 50% exclusion for stock held at least 3 years, 75% for at least 4 years, and 100% for at least 5 years.
Impact:
Owners of U.S. businesses should review their structures to possibly qualify for up to $15M of tax-free gain per shareholder if looking to sell within 5 years.
Business Interest Deduction
Interest expense remains deductible up to 30% of EBITDA, made permanent.
Impact: Favorable for leveraged cross-border entities. Care must be taken with transfer pricing and thin capitalization rules in Canada.
Opportunity Zone Extension
The legislation revives and extends the Opportunity Zone program, including new compliance rules and a refreshed timeline for investment.
Impact:
Canadian investors with U.S. capital gains can continue to defer and potentially reduce gains by reinvesting in designated zones, but only in the U.S. Structuring through U.S. entities may be required.
Other business tax changes that should increase investment in the U.S. include:
- Permanently increases the maximum amount a taxpayer can expense under Section 179 for qualifying depreciable business assets from $1M to $2.5M, with inflation adjustments (reduction for cost of qualifying property > $4M).
- Permanently restore immediate expensing for domestic research and development (R&D) expenses; small businesses with gross receipts of $31 million or less can retroactively expense R&D back to after December 31, 2021; all other domestic R&D between 2022 and 2024 can accelerate remaining deductions over a 1- or 2-year period.
- Temporarily provide 100% expensing of qualifying structures, with the beginning of construction occurring after January 19, 2025, and before January 19, 2029, and placed in service before January 1, 2031.
Planning Implications for Cross-Border Taxpayers
For U.S. Citizens in Canada:
- Update estate plans to leverage the increased $15M exemption.
- Review (Passive Foreign Investment Company (PFIC) holdings and explore compliant U.S. alternatives.
- Consider accelerated income realization under extended lower brackets.
- Coordinate child tax credit claims with Individual Taxpayer Identification Number (ITIN) and SSN rules.
For Canadians with U.S. Assets:
- Reassess ownership of U.S. real estate to minimize estate tax exposure.
- Utilize treaty-based credits to offset U.S. estate tax liability.
- Plan around SALT cap and foreign property tax restrictions.
For Cross-Border Business Owners:
- Leverage full expensing and the lower 21% corporate federal tax rate.
- Structure any pass-through entities carefully to maintain 199A benefits.
- Align interest deduction limits with financing arrangements.
Compliance and Reporting:
- Ensure accurate Form 5471, 8621, and 8865 filings.
- Monitor Controlled Foreign Corporation (CFC) and PFIC tests closely.
- Evaluate trust residency and reporting where U.S. beneficiaries are involved.
Conclusion
The Big Beautiful Bill represents a fundamental recalibration of U.S. tax law.
For cross-border Canadian and U.S. taxpayers, it offers new opportunities, but also new risks. With the “permanent” extension of TCJA provisions, enhanced exemptions, and international realignments, proactive planning is critical.
At Cardinal Point Wealth Management, we stand ready to help you navigate this evolving environment. From estate structuring to cross-border business operations, we offer integrated financial, tax, and investment strategies tailored to your unique circumstances.