diff --git a/src/thoughtsync/labeling.py b/src/thoughtsync/labeling.py
index 9b07f3f..094dc05 100644
--- a/src/thoughtsync/labeling.py
+++ b/src/thoughtsync/labeling.py
@@ -2,7 +2,7 @@
 labels, leave the tag-sourced ones alone" logic was duplicated line-for-line between
 the labels-picker API (notes.set_note_labels) and sync push (sync._apply_note_manual_labels).
 Single home so both stay in lockstep. via_tag=True rows track the body #tags and are
-governed by _reconcile_tags — this function never touches them."""
+governed by _lift_and_reconcile_tags — this function never touches them."""
 from __future__ import annotations
 
 from sqlalchemy import select
diff --git a/src/thoughtsync/notes/__init__.py b/src/thoughtsync/notes/__init__.py
index 1a744ca..9162127 100644
--- a/src/thoughtsync/notes/__init__.py
+++ b/src/thoughtsync/notes/__init__.py
@@ -72,7 +72,7 @@ from .import_export import (
     _usec_to_dt,
 )
 from .tags import (
-    _reconcile_tags,
+    _lift_and_reconcile_tags,
     parse_tags,
 )
 from .recurrence import REMINDER_RECURRENCES, next_occurrence, normalize_recurrence
@@ -87,7 +87,7 @@ __all__ = [
     "normalize_color",
     "normalize_recurrence",
     "next_occurrence",
-    "_reconcile_tags",
+    "_lift_and_reconcile_tags",
     "_serialize_notes",
     "_safe_filename",
     "_attachment_ext",
@@ -418,7 +418,7 @@ async def create_note():
         db.add(note)
         await db.flush()  # assign note.id before writing links
         # The FOLDED body: an item can carry a #tag too.
-        await _reconcile_tags(db, note)
+        await _lift_and_reconcile_tags(db, note)
         await db.commit()
         await db.refresh(note)
         # After the commit, never before it: the note is saved and the response is
@@ -473,7 +473,7 @@ async def update_note(note_id: str):
             note.recurrence = normalize_recurrence(data["recurrence"])
         if "body" in data:
             note.display_title = derive_display_title(note.body)
-            await _reconcile_tags(db, note)
+            await _lift_and_reconcile_tags(db, note)
         # Version history: snapshot the PRE-edit body, once per editing session
         # rather than once per write — see revisions.should_snapshot. Writing often
         # is what lets a client autosave instead of hoarding text until it closes.
@@ -532,7 +532,7 @@ async def restore_revision(note_id: str, rev_id: str):
         db.add(NoteRevision(note_id=note.id, body=note.body))
         note.body = rev.body
         note.display_title = derive_display_title(note.body)
-        await _reconcile_tags(db, note)
+        await _lift_and_reconcile_tags(db, note)
         await db.commit()
         await db.refresh(note)
         return jsonify(await _serialize_note(db, note))
@@ -586,7 +586,7 @@ async def _rewrite_body(db, note: Note, body: str):
         db.add(NoteRevision(note_id=note.id, body=old_body))
     note.body = body
     note.display_title = derive_display_title(body)
-    await _reconcile_tags(db, note)
+    await _lift_and_reconcile_tags(db, note)
     await db.commit()
     await db.refresh(note)
     if note.body != old_body:
diff --git a/src/thoughtsync/notes/import_export.py b/src/thoughtsync/notes/import_export.py
index 93cbe73..e1da5b8 100644
--- a/src/thoughtsync/notes/import_export.py
+++ b/src/thoughtsync/notes/import_export.py
@@ -28,7 +28,7 @@ from .helpers import (
     is_empty_note,
 )
 from .checklist import append_item
-from .tags import _find_or_create_label, _reconcile_tags
+from .tags import _find_or_create_label, _lift_and_reconcile_tags
 from .recurrence import normalize_recurrence
 
 
@@ -293,7 +293,7 @@ async def _create_imported_note(
         return False
 
     # Items fold into the body, which is where a checklist lives now (M304). Done
-    # before the Note is built so display_title and _reconcile_tags both see the
+    # before the Note is built so display_title and _lift_and_reconcile_tags both see the
     # finished text — an imported item can carry a #tag like any other line.
     for it in items:
         text = (it.get("text") or "").strip()
@@ -325,7 +325,7 @@ async def _create_imported_note(
     await db.flush()  # assign note.id before labels/attachments/links
 
     # Explicit (picker-style) labels are manual — via_tag=False. Inline #tags in the
-    # body are handled by _reconcile_tags below, same as a normal create.
+    # body are handled by _lift_and_reconcile_tags below, same as a normal create.
     for name in spec.get("labels") or []:
         name = (name or "").strip()
         if not name:
@@ -341,5 +341,5 @@ async def _create_imported_note(
         if isinstance(att, dict):
             _import_attachment(db, note, zf, att, budget)
 
-    await _reconcile_tags(db, note)
+    await _lift_and_reconcile_tags(db, note)
     return True
diff --git a/src/thoughtsync/notes/tags.py b/src/thoughtsync/notes/tags.py
index cfd4561..56bc94c 100644
--- a/src/thoughtsync/notes/tags.py
+++ b/src/thoughtsync/notes/tags.py
@@ -1,6 +1,11 @@
-"""#tags — parsing note bodies and keeping the derived tag-sourced note_labels rows
-in sync with the text. Manual (picker) labels are NOT touched here (see the labeling
-module).
+"""#tags — parsing note bodies, LIFTING the standalone ones out of the text, and
+keeping the still-in-text ones in sync with the note_labels rows. Manual (picker)
+labels are NOT touched here (see the labeling module).
+
+A tag used to be shown twice: once as the `#todo` you typed and once as a chip. The
+chip moved to the top of the card (M311) and the text now goes, but only when the tag
+was standing on its own — see `split_body_tags` for the rule and why it is the
+conservative one.
 
 Was `links.py`, and also owned `[[wiki-links]]` until they were removed (note 2897):
 this app is an intermediary surface for capture and recall, and a linking system is
@@ -15,6 +20,7 @@ from sqlalchemy import func, select
 
 from ..models.label import Label, NoteLabel
 from ..models.note import Note
+from .helpers import derive_display_title
 
 # A #tag: `#` at the start of the body or after whitespace, then a word char and
 # word chars/hyphens. A URL fragment (foo#bar) or mid-word `#` is not preceded by
@@ -22,24 +28,93 @@ from ..models.note import Note
 _TAG_RE = re.compile(r"(?:^|(?<=\s))#(\w[\w-]*)")
 
 
-def parse_tags(body: str | None) -> list[str]:
-    """Distinct #hashtags from a note body, in order, deduped case-insensitively.
-    A tag must contain a letter, so #2024 or #_ are ignored (avoids numeric noise)."""
-    if not body:
-        return []
+# A fence opens or closes a code block. A `#tag` inside one is CODE — the shell
+# comment in a snippet someone pasted — and lifting it would delete a line of their
+# example. It still becomes a label, because it always has and that is a separate
+# question from whether the text may be touched.
+_FENCE_RE = re.compile(r"^\s*(?:```|~~~)")
+
+
+def _is_tag(name: str) -> bool:
+    """A tag must contain a letter, so #2024 and #_ are ignored (avoids numeric noise)."""
+    return any(c.isalpha() for c in name)
+
+
+def _dedupe(names: list[str]) -> list[str]:
+    """First-seen order, deduped case-insensitively — tags are case-insensitive."""
     out: list[str] = []
     seen: set[str] = set()
-    for match in _TAG_RE.finditer(body):
-        tag = match.group(1)
-        if not any(c.isalpha() for c in tag):
-            continue
-        norm = tag.lower()
+    for name in names:
+        norm = name.lower()
         if norm not in seen:
             seen.add(norm)
-            out.append(tag)
+            out.append(name)
     return out
 
 
+def parse_tags(body: str | None) -> list[str]:
+    """Distinct #hashtags from a note body, in order, deduped case-insensitively."""
+    if not body:
+        return []
+    return _dedupe([m.group(1) for m in _TAG_RE.finditer(body) if _is_tag(m.group(1))])
+
+
+def split_body_tags(body: str | None) -> tuple[list[str], list[str], str]:
+    """Split a body's tags by whether the text around them can be taken away.
+
+    Returns `(standalone, inline, lifted_body)`.
+
+    THE RULE: a line containing nothing but tags and whitespace is removed. Anything
+    else is left exactly as written.
+
+    That is deliberately the conservative reading of "standalone". The looser one —
+    also stripping a trailing tag off a prose line — was rejected because a trailing
+    tag is ambiguous and the text does not say which it is: `buy milk #grocery` is
+    filing, `remember to call #mom` is the sentence's object, and lifting the second
+    leaves "remember to call". Mangling a sentence to save a duplicate chip is a bad
+    trade. A tag sharing a line with words keeps its words.
+
+    `standalone` tags become ORDINARY labels — the text no longer backs them, so
+    nothing can derive them any more, and the way to remove one becomes the chip's ×
+    rather than deleting the text. `inline` tags stay derived exactly as before. That
+    is the whole meaning of `via_tag` after this change: backed by text still present.
+    """
+    if not body:
+        return [], [], body or ""
+    standalone: list[str] = []
+    inline: list[str] = []
+    kept: list[str] = []
+    in_fence = False
+    for line in body.split("\n"):
+        if _FENCE_RE.match(line):
+            in_fence = not in_fence
+            kept.append(line)
+            continue
+        matches = [m for m in _TAG_RE.finditer(line) if _is_tag(m.group(1))]
+        names = [m.group(1) for m in matches]
+        # Cutting the tags out and finding nothing left is what "standalone" means.
+        remainder = line
+        for m in reversed(matches):
+            remainder = remainder[: m.start()] + remainder[m.end() :]
+        if in_fence or not matches or remainder.strip():
+            inline.extend(names)
+            kept.append(line)
+        else:
+            standalone.extend(names)
+    lifted = re.sub(r"\n{3,}", "\n\n", "\n".join(kept)).strip("\n")
+    if body.strip() and not lifted.strip():
+        # The note was NOTHING but tags. Lifting would leave a blank card, which is a
+        # worse outcome than a duplicated chip — so leave it alone and let its tags
+        # stay derived.
+        return [], _dedupe(standalone + inline), body
+    # A tag that ALSO appears in prose stays derived: the prose copy still backs it,
+    # so deleting that copy should still detach the label.
+    inline_names = _dedupe(inline)
+    inline_lower = {n.lower() for n in inline_names}
+    standalone_names = [n for n in _dedupe(standalone) if n.lower() not in inline_lower]
+    return standalone_names, inline_names, lifted
+
+
 async def _find_or_create_label(db, owner_id, name: str):
     """Owner's label id for `name` (case-insensitive match), creating it if absent."""
     existing = await db.scalar(
@@ -53,23 +128,65 @@ async def _find_or_create_label(db, owner_id, name: str):
     return label.id
 
 
-async def _reconcile_tags(db, note: Note) -> None:
-    """Sync tag-sourced labels (via_tag=True) with the #hashtags in the note body:
-    attach labels for current tags, detach tag-labels whose #tag was removed. Manual
-    picker labels (via_tag=False) are never touched."""
-    tag_label_ids: set = set()
-    for name in parse_tags(note.body):
-        tag_label_ids.add(await _find_or_create_label(db, note.owner_id, name))
+async def _lift_and_lift_and_reconcile_tags(db, note: Note) -> None:
+    """Attach the note's tag labels, LIFT its standalone tags out of the body, and
+    re-derive display_title if the body moved.
+
+    NAMED FOR THE MUTATION. It used to be `_lift_and_reconcile_tags` and only touched rows;
+    it now rewrites `note.body`, and a caller that does not expect that will compute
+    a display_title from text this function is about to delete.
+
+    Which is why the lift and the re-derivation both live HERE rather than at the
+    seven call sites that would each have to remember. Spreading a derived-value
+    update across every place a body can be written is precisely the failure #2965
+    named about label minting: "easy to miss, and it is the common one".
+
+    The two kinds of tag are handled differently, and that difference IS what
+    `via_tag` means from here on — backed by text still in the body:
+
+      standalone  lifted out, attached as an ORDINARY label (via_tag=False). Nothing
+                  derives it any more because nothing is left to derive it from, and
+                  the way to remove it becomes the chip's × — which both editors
+                  already offer for exactly this class of label.
+      inline      left in place, attached via_tag=True, and still detached when its
+                  text goes. Unchanged from before.
+    """
+    standalone, inline, lifted = split_body_tags(note.body)
+    standalone_ids: set = set()
+    for name in standalone:
+        standalone_ids.add(await _find_or_create_label(db, note.owner_id, name))
+    inline_ids: set = set()
+    for name in inline:
+        inline_ids.add(await _find_or_create_label(db, note.owner_id, name))
+
     rows = (await db.scalars(select(NoteLabel).where(NoteLabel.note_id == note.id))).all()
-    attached_ids = {r.label_id for r in rows}
-    # Detach tag-labels no longer backed by a #tag in the body.
+    attached: set = set()
     for r in rows:
-        if r.via_tag and r.label_id not in tag_label_ids:
-            await db.delete(r)
-            attached_ids.discard(r.label_id)
-    # Attach new tags — skip labels already attached (in any form) to respect the PK
-    # and leave a manually-added label of the same name as-is.
-    for lid in tag_label_ids:
-        if lid not in attached_ids:
+        if not r.via_tag:
+            attached.add(r.label_id)  # manual already: a #tag of the same name changes nothing
+        elif r.label_id in standalone_ids:
+            # It GRADUATED. The text backing it is about to be deleted, so the row has
+            # to become the record instead. This must run BEFORE the detach below, or
+            # the same row would be dropped for no longer being in the body — which is
+            # the bug that makes a naive lift delete every tag it touches.
+            r.via_tag = False
+            attached.add(r.label_id)
+        elif r.label_id in inline_ids:
+            attached.add(r.label_id)
+        else:
+            await db.delete(r)  # its #tag was deleted from the text
+
+    # Skip anything already attached in ANY form: it respects the PK, and it leaves a
+    # manually-added label of the same name as the manual row it already is.
+    for lid in standalone_ids:
+        if lid not in attached:
+            db.add(NoteLabel(note_id=note.id, label_id=lid, via_tag=False))
+            attached.add(lid)
+    for lid in inline_ids:
+        if lid not in attached:
             db.add(NoteLabel(note_id=note.id, label_id=lid, via_tag=True))
-            attached_ids.add(lid)
+            attached.add(lid)
+
+    if lifted != note.body:
+        note.body = lifted
+        note.display_title = derive_display_title(note.body)
diff --git a/src/thoughtsync/sync.py b/src/thoughtsync/sync.py
index f5e141a..a324c7a 100644
--- a/src/thoughtsync/sync.py
+++ b/src/thoughtsync/sync.py
@@ -27,7 +27,7 @@ from .models.note import Note
 from .models.note_revision import NoteRevision
 from .revisions import should_snapshot
 from .notes import (
-    _reconcile_tags,
+    _lift_and_reconcile_tags,
     _serialize_notes,
     derive_display_title,
     normalize_color,
@@ -222,7 +222,7 @@ def _assign_note_fields(note: Note, ch: dict) -> None:
 
 async def _apply_note_manual_labels(db, note: Note, ch: dict) -> None:
     """Set the note's MANUAL (picker) label memberships from client label_ids, leaving
-    tag-sourced (via_tag) rows to _reconcile_tags. Only labels the caller owns count."""
+    tag-sourced (via_tag) rows to _lift_and_reconcile_tags. Only labels the caller owns count."""
     raw = ch.get("label_ids")
     if not isinstance(raw, list):
         return
@@ -289,7 +289,7 @@ async def _apply_note(db, ch: dict) -> dict:
     if not creating and await should_snapshot(db, note.id, old_body, note.body):
         db.add(NoteRevision(note_id=note.id, body=old_body))
     await db.flush()  # assign note.id before items/labels/links
-    await _reconcile_tags(db, note)
+    await _lift_and_reconcile_tags(db, note)
     await _apply_note_manual_labels(db, note, ch)
     await db.flush()
     await db.refresh(note, ["sync_revision"])
diff --git a/tests/test_integration.py b/tests/test_integration.py
index 3b2ff66..527033e 100644
--- a/tests/test_integration.py
+++ b/tests/test_integration.py
@@ -25,8 +25,10 @@ from sqlalchemy import select, text
 from thoughtsync import ratelimit
 from thoughtsync.app import create_app
 from thoughtsync.db import dispose_engine, session_scope
+from thoughtsync.models.label import NoteLabel
 from thoughtsync.models.note import Note
 from thoughtsync.models.user import User
+from thoughtsync.notes.tags import _lift_and_reconcile_tags
 from thoughtsync.settings import get_setting, live, refresh_live, reset_live, set_settings
 from thoughtsync.notes.checklist import parse_items, set_item_checked
 from thoughtsync.notes.helpers import derive_display_title
@@ -199,6 +201,74 @@ async def test_ticking_an_item_is_a_body_edit(db, owner):
     assert stored.splitlines()[0] == "packing"
 
 
+async def test_a_standalone_tag_leaves_the_body_and_becomes_an_ordinary_label(db, owner):
+    """M311. The tag was being shown twice — as text and as a chip — so the text goes.
+
+    `via_tag=False` is the load-bearing half. It is what makes the chip's × appear in
+    both editors (they gate it on exactly this), which matters because deleting the
+    text is no longer a way to remove the tag: there is no text.
+    """
+    note = Note(owner_id=owner.id, body="#todo\nreorganize the homepage", display_title="#todo")
+    db.add(note)
+    await db.flush()
+    await _lift_and_reconcile_tags(db, note)
+    await db.commit()
+
+    assert note.body == "reorganize the homepage"
+    # Re-derived by the lift itself. Every caller sets display_title BEFORE calling,
+    # so if the function did not do this the note would be named after a line it had
+    # just deleted.
+    assert note.display_title == "reorganize the homepage"
+
+    rows = (await db.scalars(select(NoteLabel).where(NoteLabel.note_id == note.id))).all()
+    assert len(rows) == 1
+    assert rows[0].via_tag is False
+
+
+async def test_a_tag_moved_onto_its_own_line_graduates_instead_of_vanishing(db, owner):
+    """The bug a naive lift has, pinned.
+
+    A tag that is still in prose stays derived. Move it to its own line and it must
+    become an ordinary label — NOT be detached for no longer appearing in the body,
+    which is what happens if the row is dropped before it is graduated.
+    """
+    note = Note(owner_id=owner.id, body="call #mom tomorrow", display_title="call #mom tomorrow")
+    db.add(note)
+    await db.flush()
+    await _lift_and_reconcile_tags(db, note)
+    await db.commit()
+
+    rows = (await db.scalars(select(NoteLabel).where(NoteLabel.note_id == note.id))).all()
+    assert len(rows) == 1
+    assert rows[0].via_tag is True
+    assert note.body == "call #mom tomorrow", "a tag inside a sentence is left alone"
+
+    note.body = "#mom\ncall tomorrow"
+    await _lift_and_reconcile_tags(db, note)
+    await db.commit()
+
+    rows = (await db.scalars(select(NoteLabel).where(NoteLabel.note_id == note.id))).all()
+    assert len(rows) == 1, "the label survived the move"
+    assert rows[0].via_tag is False
+    assert note.body == "call tomorrow"
+
+
+async def test_deleting_an_inline_tag_still_detaches_it(db, owner):
+    """The old behaviour, unchanged where the text is unchanged. A tag still living in
+    prose is still owned by that prose."""
+    note = Note(owner_id=owner.id, body="call #mom tomorrow", display_title="call #mom tomorrow")
+    db.add(note)
+    await db.flush()
+    await _lift_and_reconcile_tags(db, note)
+    await db.commit()
+    assert len((await db.scalars(select(NoteLabel).where(NoteLabel.note_id == note.id))).all()) == 1
+
+    note.body = "call tomorrow"
+    await _lift_and_reconcile_tags(db, note)
+    await db.commit()
+    assert (await db.scalars(select(NoteLabel).where(NoteLabel.note_id == note.id))).all() == []
+
+
 async def test_a_note_with_only_a_list_still_has_a_name(db, owner):
     """The hole that made removing the title unsafe, still closed — by a different
     mechanism. There is no item table to fall back to any more; the name comes from
diff --git a/tests/test_notes.py b/tests/test_notes.py
index ef83f31..c1d3940 100644
--- a/tests/test_notes.py
+++ b/tests/test_notes.py
@@ -31,6 +31,7 @@ from thoughtsync.notes import (
     parse_list_items,
     parse_tags,
 )
+from thoughtsync.notes.tags import split_body_tags
 
 
 @pytest.fixture
@@ -168,6 +169,57 @@ def test_derive_display_title_caps_length():
     assert derive_display_title(f"- [ ] {long}") == "x" * 200
 
 
+def test_split_body_tags_lifts_only_a_line_that_is_nothing_else():
+    """The rule, in the cases it exists to get right.
+
+    A tag on a line of its own is filing and the line can go. A tag sharing a line
+    with words is part of what was written, and taking it out would leave "remember to
+    call" — so the line is left exactly as typed. The trailing-tag case (`buy milk
+    #grocery`) is deliberately on the conservative side of the line: it reads like
+    filing, but nothing in the text distinguishes it from `remember to call #mom`, and
+    guessing wrong mangles a sentence to save a duplicate chip.
+    """
+    assert split_body_tags("#todo\nreorganize the homepage") == (["todo"], [], "reorganize the homepage")
+    assert split_body_tags("needs a tauri app\n#todo") == (["todo"], [], "needs a tauri app")
+    assert split_body_tags("#todo #work\nreal text") == (["todo", "work"], [], "real text")
+
+    unchanged = "remember to call #mom tomorrow"
+    assert split_body_tags(unchanged) == ([], ["mom"], unchanged)
+    trailing = "buy milk #grocery"
+    assert split_body_tags(trailing) == ([], ["grocery"], trailing)
+
+
+def test_split_body_tags_leaves_the_note_readable():
+    # Removing a line must not leave a hole where it was.
+    assert split_body_tags("foo\n\n#todo\n\nbar") == (["todo"], [], "foo\n\nbar")
+
+    # A note that is NOTHING but tags would be blanked. A duplicated chip beats an
+    # empty card, so it keeps its text and its tags stay derived.
+    assert split_body_tags("#todo") == ([], ["todo"], "#todo")
+    assert split_body_tags("#todo #work") == ([], ["todo", "work"], "#todo #work")
+
+    # A tag in a code fence is CODE — a shell comment in somebody's snippet. It still
+    # becomes a label, because it always has, but the line is never touched.
+    fenced = "code:\n```\n#!/bin/sh\n#deploy\n```\ndone"
+    assert split_body_tags(fenced) == ([], ["deploy"], fenced)
+
+    # Not a tag at all (no letter), so not a tag-only line either.
+    assert split_body_tags("#2024\nreal") == ([], [], "#2024\nreal")
+
+    assert split_body_tags("") == ([], [], "")
+    assert split_body_tags(None) == ([], [], "")
+
+
+def test_split_body_tags_keeps_a_tag_derived_when_prose_still_carries_it():
+    """Appearing on its own line does NOT lift a tag that is also written in a
+    sentence — the sentence still backs it, so deleting that sentence should still
+    detach the label. Standalone and inline are not both true of one tag."""
+    standalone, inline, body = split_body_tags("#todo\nremember the #todo list")
+    assert standalone == []
+    assert inline == ["todo"]
+    assert body == "remember the #todo list"
+
+
 def test_parse_tags():
     assert parse_tags("buy milk #groceries and #to-do now") == ["groceries", "to-do"]
     # case-insensitive dedup, first spelling wins