Complex sentence: First, although contributions are not deductible from the donor's federal income tax liability, in 34 states, there is a state tax incentive--either a deduction or a credit--for residents investing in their home state's 529 savings plan.
Split into simpler sentences: First, although contributions are not deductible from the donor's federal income tax liability, many states provide state income tax deductions for all or part of the contributions of the donor. In 34 states, there is a state tax incentive--either a deduction or a credit--for residents investing in their home state's 529 savings plan.