The ongoing pandemic has spurred an exodus from dense, metropolitan areas in high income tax jurisdictions, such as New York City. With the requirements coupled with the ability for business owners and employees to work remotely, it remains to be seen whether urban populations will return to pre-pandemic levels.

Many of those who leave metropolitan areas for a new state in the pandemic do not intend to remain in the new state indefinitely. For this reason, they are effectuating a temporary change in "residency," rather than "domicile." Residency and domicile are distinct concepts for income tax purposes. While an individual may have more than one residence, she may only have one domicile. The New York taxing authorities have generally referred to an individual's domicile as "the place you intend to have as your permanent home" or "the place you intend to return to after being away (as on vacation, business assignments, educational leave, or military assignment)." A domicile continues until an individual abandons it and moves to a new jurisdiction with the intent to make a permanent home there.

Understanding the effect of being domiciled in a jurisdiction is critical to navigating income and transfer tax planning, because domicile forms the basis for the imposition of tax. Domiciliaries are generally subject to income tax on worldwide income, whereas nonresidents are subject to tax only with respect to state-sourced income. For this reason, taxing authorities in high income tax states are often viewed as aggressively auditing taxpayers on the basis of domicile. New York state may tax an individual as a resident on two grounds: She is a domiciliary or she meets the statutory residence test under the residence test for a non-domiciliary. In addition, New York City imposes a city-level income tax on residents.