I moved to PA from MD. I still work in MD and am updating my MW507. It states I can only claim exemption if I live in MD less than 183 days. I will have lived in MD over this amount for the 2020 tax year. Does this mean I should only have MD taxes withheld? Will I still be responsible for part year PA taxes? What should I do about local taxes?
When you change your domicile (your main, permanent residence) from one state to another, for tax purposes you become a part-year resident of each of the two states for that tax year. Instruction 26 of the Maryland Tax Instruction booklet states that part-year residents must show all income reported on their federal return, but they are permitted to subtract income received when not a resident of MD. Therefore it is not necessary to have your employer withhold MD taxes for the income you earn after you become a resident of PA, because MD isn't going to tax that income.
Unfortunately, Form MW507 doesn't seem to cover the situation of part-year state residents. But if your employer continues to withhold MD taxes after your move to PA, you'll be able to recover the excess withholding in the form of a tax refund. (You should have no problem completing Form MW507 for next year, assuming that next year you'll be a full-year resident of PA.)
You become a domicile resident of PA on the day you begin living in your new home in PA. Once you become domiciled in PA, all your income becomes subject to PA taxation. So for 2020, you'll be filing a tax return as a part-year resident in each of the two states.
Once you become a full-year resident of PA, you'll no longer have to file an MD tax return - assuming that all your income from MD consists of W-2 earnings. This is due to the tax reciprocity between the two states.
"I am still confused as I moved to PA from MD. Not to MD from PA."
Sorry - brain cramp. I've corrected my initial answer.