President Donald Trump’s sweeping tax and spending bill, the “One, Big, Beautiful Bill” Act, looks like a windfall for artificial intelligence (AI). Among many goodies, it includes a last-minute clause banning state-level regulations of AI.
“No State or political subdivision thereof may enforce any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10-year period beginning on the date of the enactment of this Act,” says a telling passage in the 1,116-page bill.
Additionally, the bill sets aside hundreds of millions of dollars for the use of AI in customs and border security, Social Security and information technology, and naval shipbuilding.
“It may not be branded as an AI bill, but long term it is,” Sandy Carter, chief operating officer at Unstoppable Domains, said in an email. “By locking in tax relief for small businesses and entrepreneurs — many of whom are building the next generation of AI startups— this bill could become a cornerstone of America’s AI economy.”
There are no federal laws or regulations governing AI, though President Joe Biden introduced an AI Bill of Rights, a nonbinding, non-enforceable set of guidelines for responsible use of the technology. Biden also signed an executive order establishing some safety standards for AI development and use that Trump has since jettisoned.
Trump’s proposed bill, which passed the House on Friday and is likely to face stiff opposition in the Senate, calls for the end of state AI regulations but it doesn’t establish groundwork for any kind of law or regulatory framework on a local, state or federal level.
Removal of all AI state laws would open a panacea for AI companies while creating potential nightmares for consumers and regulators, legal experts warn. Current AI state laws establish rules for the use of AI in accessing personal data, hiring for open roles, housing decisions, and providing mental health services.
The AI language in the bill is likely to be welcomed in Silicon Valley and other corridors of tech as the industry tries to establish dominance amid escalating competition from China.
OpenAI CEO Sam Altman is one of the industry leaders who has advocated looser regulations, including the right to use copyrighted material to train AI models.
Trump, in turn, has shown a willingness to support AI through tariffs to encourage domestic production of AI hardware, opened the door for AI models to be trained on government data, and emphasized AI innovation in the U.S. via the Stargate project, a $500 billion, four-year initiative backed by OpenAI, SoftBank, Oracle Corp., and others.
Cuts under the Trump Administration to scientific research in academic settings would also aid the spending bill in favoring commercial AI development — especially to the benefit of Big Tech players in the space.
Still, the president’s bill has sparked opposition from some Senate Republicans and a bipartisan group of state attorneys general. They blasted the bill for not suggesting a replacement framework and stress the necessity of state AI regulations in the absence of Congressional action.
“AI has incredible potential but amplifies every risk we’ve seen from Big Tech and creates new risks we don’t fully understand,” Tennessee Attorney General Jonathan Skrmetti said in a statement. “Eliminating state oversight through this reconciliation amendment guarantees Americans will suffer repeated violations of their privacy, consumer protection, and antitrust laws.”
