ALEC Pushes States Toward Lighter AI Regulation, Tax Protections
The American Legislative Exchange Council released a policy toolkit calling for limited government restrictions on artificial intelligence, arguing that existing laws already address the technology's genuine risks.
ALEC proposes the Right to Compute Act, modeled after Montana legislation, which would require governments to justify any restrictions on AI or emerging technologies. The standard: restrictions must be narrowly tailored and serve a compelling government interest.
The group identified fraud, deepfake content, and data center infrastructure problems as legitimate areas for regulation. Most other AI concerns, ALEC argues, fall under existing fraud and discrimination laws that don't target technology specifically.
The Regulation Surge
States introduced more than 1,000 AI-related bills in 2025, with 118 becoming law. ALEC said this volume signals unnecessary duplication of protections already on the books.
"In many cases, the federal government, states and localities already have sufficient laws designed to address fraud or discrimination in a technology-neutral way," the report reads.
Tax Treatment and Government Efficiency
ALEC also proposed the Artificial Intelligence Tax Non-Discrimination Act to prevent states from singling out AI services for special taxation. The policy would block taxes on computing power and AI subscriptions.
The council criticized New York's law that imposes taxes on businesses implementing AI to replace workers. Tax policy should remain technology-agnostic, ALEC said, avoiding favoritism toward specific industries.
Texas offers examples of government AI deployment working effectively. The state's transportation department used machine vision to clear crashes and respond to emergencies faster. Other Texas agencies converted two-week paperwork processes into 13-second tasks using AI.
Jake Morabito, senior director of policy at ALEC, pointed to Virginia's approach under former Gov. Glen Youngkin as a model: legislation that regulates AI integration in government and schools with specific, measurable objectives.
For government professionals navigating these policy debates, understanding the technical and business implications of AI regulation is essential. AI Learning Path for Policy Makers covers governance, policy analysis, and data-driven decision making for government strategy. AI for Government resources address implementation and regulatory frameworks directly.
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