For most people, making sense of tax laws can be like deciphering an entirely foreign language. But understanding how the laws affect you can have an impact on everything from the way you file your taxes to the inheritances you leave loved ones in your will. Below, the estate planning attorneys at Ng & Niebling in Honolulu, Hawaii, explain some of the key changes to the state's tax laws.

Earned Income Tax Credit

The earned income tax credit aims to shift some of the tax burden from lower-earning Hawaiians by transferring it to the highest income earners. This is accomplished with a specific earned income tax credit at the state level.

Hawaii has also reinstated three taxation brackets and increased the top marginal rate from 8.25% to 11%, paired with the addition of the nonrefundable state earned income tax credit at 20% of the value of the federal credit. If you have an attorney or CPA handling your taxes, review this information with them so you fully understand how much you will gain or lose with the change.

Cesspool Tax Credit Expansion

If you own property that has been plagued by a cesspool, you may qualify for special credits under recent changes to Hawaiian tax law. According to the state tax authority, the cesspool tax credit is extended "to include cesspools that: are within 500 feet of a shoreline, perennial stream or wetland; impact drinking water supplies or recreational waters; or are certified by a county or private sewage company to be appropriate for connection to its existing sewer system." Also, if you had a cesspool issue in 2017 and still have not done your taxes for the year, you can incorporate the tax credit into your 2017 filing.

How These Changes May Affect You

These are the two main changes in Hawaiian tax law that can impact individual filers in the state. So, how do you know if they apply to you? If you are a higher-income earner, your taxes at the state level could very well be higher than they were last year.

If you are a lower-income earner, you will likely see some tax savings. The cesspool tax credit applies to property owners who experience damage because of cesspools on their land, but all property owners should be aware of this tax option should an issue strike in the future.

If your income levels will be significantly affected by Hawaii's tax law changes, you might also have to consider how your money is allocated in your estate planning documents. The team at Ng & Niebling is here to help you determine the extent to which your estate plans may be concerned with taxation increases or decreases. Call (808) 732-7788, visit their website, or contact an attorney via Google+ to schedule a free initial consultation.