Interesting that your state deduction apparently gets reduced by the amount of your "qualified withdrawals" for the year. This is the first I have heard of such a reduction. In most cases, and certainly here in IL, there is no such reduction. So, for example, a couple could contribute $20,000 to any combination of IL 529's (note, not to any out of state 529's), withdraw the funds the next day, and still earn the full $20,000 deduction from their IL taxable income.
So are you sure about this reduction? Seems counter-intuitive, to give a resident a deduction and then take it away for actually then using the money inside the 529.