Tax residency rules, audits, and the severance record (2026)
2026.1 Edition · Revised 2026-07-25 · DomusDay Research
Moving out of Maryland is easy. Stopping Maryland taxes is a different act, and it happens on paper: Maryland keeps treating you as a resident until the record shows otherwise.
On the burden of showing otherwise: AR 37 states that mere intent to treat a place as domicile is not enough — intent must be supported by action, with ties established in the new location while ties to Maryland are severed.
Two tests decide it. Cross 183 days with a Maryland abode still available and you are taxed as a resident regardless of where you claim to live — and see day-counting rules. Or keep the day count clean but leave the life-pattern evidence pointing at Maryland, and domicile does the same work. Everything on this page exists to answer one question: if Comptroller asks, does your record hold?
Every Maryland county (and Baltimore City) levies a mandatory local income tax of 2.25%–3.30% collected with the state tax. On top of the 6.5% state top rate, combined top marginal rates approach 9.8% — the county rate is set by where the taxpayer resides.
Source ↗Maryland levies an estate tax — $5,000,000 exclusion with spousal portability — and a separate 10% inheritance tax on property passing to recipients outside the exempt family classes. Nonresident decedents' Maryland real and tangible property stays within reach of both.
Source ↗A nonresident individual selling Maryland real property has 8.75% of the total payment withheld at settlement via Form MW506NRS (8.25% for entities) before the deed is recorded — a prepayment reconciled on the nonresident return, and it reaches former residents selling the old house after the move.
Source ↗Beginning tax year 2025, Maryland taxable income over $500,000 single / $600,000 joint is taxed at 6.25%, and over $1,000,000 / $1,200,000 at 6.5% — the schedule formerly topped out at 5.75%. Filers with federal AGI over $350,000 also owe 2% more on certain net capital gains.
Source ↗This is the test with a number in it, and the number is what an auditor can verify line by line. Keep any Maryland dwelling suitable for year-round use and spend more than 183 days in the state, and Maryland taxes all of your income — domicile arguments never enter into it. See day-counting rules: a morning meeting, a connection through the city with a dinner on the ground, a single evening — each is a full day against the threshold.
Maryland calls this the "statutory resident" test: a non-domiciliary who maintains a place of abode in the state for more than 6 months of the taxable year and is physically present 183 days or more is taxed as a full resident. Domicile on the last day of the taxable year is the other route to resident status. Maryland publishes no part-day counting rule comparable to New York's; AR 37 frames the count as days of physical presence.
A place of abode maintained in Maryland for more than 6 months of the taxable year. The test is conjunctive: the statute (Tax-General §10-101) reaches an individual who maintained a Maryland place of abode for more than 6 months, and Administrative Release 37 states the individual is a statutory resident when also physically present in Maryland for 183 days or more during the taxable year.
Selling the apartment is not the test, and neither is the new driver's license. Maryland presumes an established domicile continues until it is shown to have changed — the true, fixed, permanent home, habitation and principal establishment, without any present intention of removing therefrom (Administrative Release 37). On the burden: AR 37 states that mere intent to treat a place as domicile is not enough — intent must be supported by action, with ties established in the new location while ties to Maryland are severed. Examiners weigh 3 primary factors — where the person lives and votes, home ownership and size, time spent — and they weigh what you did, not what you intended. The pattern of an actual life somewhere else is the evidence; everything else is secondary.
A clean exit does not end every Maryland claim. These rules keep taxing specific situations after the move — each one is a way the state stays in your return.
AffectsLeavers who keep Maryland rental property, business interests, or Maryland workdays.
AffectsMovers who sell Maryland real estate after the change of residence.
AffectsHigh-income movers with Maryland-source capital gains after the move.
Comptroller of Maryland (Comptroller) runs a moderate-intensity residency program. The Comptroller publishes a detailed residency framework (Administrative Release 37) but no residency-audit statistics or dedicated audit manual. An examination is not an argument about intentions — it is a request for documents, and the request looks like this:
Every item on that list either exists in your records from the year of the move, or it does not. That is the whole game — and why the severance record below is the section that matters most.
An audit years from now is answered with documents generated in the months around the move. This is that inventory — grouped the way examiners think about a life, each item paired with the evidence it leaves behind.
The residence end date on Form 502 splits the year: income through that date is taxed at resident rates including the county tax, and Maryland-source income afterward at the nonresident rates. Large income events near the change date draw scrutiny under AR 37's intent-supported-by-action framework, the 2% capital gains surcharge applies in the move year when federal AGI exceeds $350,000, and a Maryland house sold after the move triggers the 8.75% closing withholding.
AR 37 names where the person lives and where the person is registered to vote as the most important domicile factors — Maryland registration that continues after a claimed move cuts against the change.
Source ↗A driver's license is among the ties AR 37 weighs; the destination state's license is a dated record on the far side of the move.
Source ↗Where vehicles are registered is an enumerated AR 37 factor; re-registration in the new state is dated evidence.
Source ↗A Maryland place of abode maintained for more than 6 months of the year keeps the statutory-resident test live whenever presence reaches 183 days — sale or lease of the Maryland dwelling closes that route.
Source ↗AR 37 compares the homes themselves — owned versus rented, and their relative size and use — when a Maryland dwelling is kept alongside the new one.
Source ↗The Homestead Tax Credit attaches only to an owner's principal residence occupied at least six months of the year — a credit still flowing to a Maryland house after a claimed move contradicts the new domicile.
Source ↗Where bank accounts are maintained is an enumerated AR 37 factor; moved accounts are dated evidence of the shift.
Source ↗Active participation in a Maryland business is an AR 37 factor — continuing operational involvement weighs toward Maryland, and Maryland business income stays taxable to nonresidents regardless.
Source ↗Physicians, dentists, and advisors are part of the fabric of ties AR 37 examines; relationships established in the new state generate dated, located records.
Where immediate family lives and where children attend school are enumerated AR 37 factors.
Source ↗AR 37 asks where items of sentimental value are kept — the destination of the possessions that matter is evidence of where the permanent home is.
Source ↗With any retained Maryland abode held more than 6 months, the 183-day presence count decides statutory residency — contemporaneous day records date both sides of the line.
Source ↗Maryland's change-year filing is Form 502 marked part-year, with the dates of Maryland residence entered and income allocated to the residence period; Maryland-source income afterward goes on nonresident Form 505.
Source ↗Every rule on this page traces to one of these. When a blog and a statute disagree, the statute wins — start here.
How these are chosen, what the automated gates catch, and what this site deliberately does not do: how these guides are made →
The year of the move is filed on 502, with income split between the resident and nonresident periods — and that return is itself evidence: it states your change date on a signed document. Settlement agents withhold 8.75% of the total payment when a nonresident individual sells Maryland real property (8.25% for entities), remitted with Form MW506NRS before the deed is recorded.
Maryland taxes a non-domiciliary as a full resident when both prongs are met: a place of abode maintained in the state for more than 6 months of the taxable year, and physical presence of 183 days or more (Tax-General §10-101; Administrative Release 37). Domicile on the last day of the year is the other route to resident status.
Administrative Release 37 says intent alone is not enough — it must be supported by action, with ties established in the new state while Maryland ties are severed. The two most important factors are where the person lives and where the person is registered to vote, followed by home ownership and size, time in each state, business involvement, family, sentimental possessions, vehicle registration, and banking.
The sale closes as a nonresident sale: the settlement agent withholds 8.75% of the total payment (Form MW506NRS) before the deed is recorded, and the actual tax — including the 2% capital gains surcharge for filers with federal AGI over $350,000 — is reconciled on nonresident Form 505.
Form 502 — the resident return — marked with a 'P' for part-year, with the dates of Maryland residence entered and income allocated to the residence period. Maryland-source income after the move goes on nonresident Form 505 in later years.
Only partly. Maryland's estate tax ($5,000,000 exclusion, with spousal portability) and its 10% inheritance tax on non-exempt recipients continue to reach Maryland real and tangible property owned by nonresident decedents — moving changes what is reachable, not whether the taxes exist.
The MVA gives 60 days from the move to update the driver's license and to title and register vehicles, with insurance from a Maryland-approved insurer at 30/60/15 minimums. Voter registration is open online with an MVA-issued license or ID, and the one-time Homestead Tax Credit application places a dated principal-residence record in state files.
By the county of residence: each county and Baltimore City sets its own rate between 2.25% and 3.30%, collected with the state return. The rate on top of the state schedule therefore depends on where in Maryland the new home is.
2026.1 Edition · Revised 2026-07-25 · DomusDay Research