This is how Montana calculates your tax. You are not taxed on all of your income in Montana. However, Montana pretends that all of your income is taxable in Montana. Then, after calculating what your tax would be on that amount, your tax is prorated to the percentage of income that was earned in Montana.
Thus, while you are not taxed on all of your income in Montana, all of your income is factored in to determine your Montana tax.
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