Canadians who invest or own property in the U.S. could soon pay more in taxes if President Donald Trump gets his proposed new spending bill passed by the Senate.
And everyday Canadians, as well as seasoned investors, could be affected.
Not to be confused with Trump’s tariff policies, his administration’s so-called “Big, Beautiful, Bill” contains a large amount of tax amendments, with many aimed at nations with what Trump deems “unfair” foreign tax regimes.
Although specific countries are not mentioned in the bill, there is growing concern being expressed by experts that the wording could let Trump target Canada, among other nations.
“If that happens, that would not be great for Canadian investors in U.S. companies because we could face taxes up to 50 per cent as well as Canadian taxes on owning U.S. Securities,” says cross-border investment adviser Joe Macek at IA Private Wealth.
“Right now we have a tax treaty with America and we are not double taxed on many of our pension plans. This would include RSPs, pension plans, and those things that have that tax-treaty privilege, that could be affected.”
What are the proposed changes?
If Canada is included in the potential tax changes, then investors who see income generated from holdings in the United States should expect to pay more to receive those funds.
This may include dividends generated from some equities like U.S. stocks, which are a common part of many people’s retirement investment portfolios.
A dividend is a form of investment income where a company that offers stock to the public for purchase pays those shareholders additional money depending on the company’s performance, and usually every quarter or three-month period.
For example, Apple‘s stock is worth approximately $200 USD as of Wednesday morning with the current dividend rate set at $0.26 per share.
That dividend payment is what would be considered income by this proposed tax amendment if it is being paid to an individual or business based outside of the U.S, like in Canada.
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If an individual has 50 shares valued at about $10,000 in total, that means they will be paid $13 USD every quarter as long as they keep their Apple stock.
The current tax owed on U.S. income such as a dividend is 15 per cent under the taxation treaty between Canada and the U.S. If this scenario involves a Canadian investor in Apple, then that $13 dividend example means they would owe $1.95 in taxes each time the dividend is paid out.
However, under these new tax proposals in Trump’s bill, that figure would increase by five per cent each year starting in January 2026 to a total of 50 per cent tax after seven years.
Another example of investment income could be from real estate.
For example, if a Canadian individual or business owns rental property in the U.S., the monthly rent paid by tenants to those owners would also be subject to these new potential increases.
“Basically all U.S. taxes paid by foreigners are going up five per cent a year,” says cross-border tax lawyer Max Reed at Polaris Tax Council.
“Foreign businesses that operate in the United States are really affected too, including big Canadian multinationals with U.S. subsidiaries.”
Canadians may also see their retirement portfolios impacted if this bill gets passed, as Reed explains,
“Canadian pensions like CPP, teachers, and down from there are mostly all exempt from U.S. tax on a bunch of their U. S. income, and that’s getting turned off if the Trump administration applies this, so all of a sudden they will start having some U.S. tax exposure.”
What’s behind the proposed change?
As for the motivation behind the tax changes in Trump’s spending bill, Reed notes, “It’s really easy to link it to the tariffs…it’s the same ideology.”
Although Trump has shown that he is willing to negotiate on tariffs, the same may not be the case for these new tax laws if passed.
“The implications are going to get a slow burn. And so I think that that makes it a lot more likely to stick than the tariffs, which are just so acute and so shocking,” says Reed.
Reed said while the U.S. does not name Canada, it does refer to any foreign country that imposes a form of digital services tax on U.S. companies — which Canada does.
Canada’s digital services tax requires foreign tech giants to pay three-per cent tax “on certain revenue earned from engaging with online users in Canada if they meet certain conditions,” according to the federal government’s webpage about the tax.
While the news of potential higher taxes may have many Canadians worrying about their retirements or investments, Macek says the best thing to do right now is keep calm and watch what happens next.
“Panic buying and panic selling I don’t think has ever served any investor well,” he said.
“Right now, the bill has not passed. So the short answer is: do nothing, and stay patient.”
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