US Senate Removes Decade-Long AI Regulation Ban from Trump’s Tax and Spending Bill

US Senate Removes State AI Regulation Ban from Trump Tax Bill

The Republican-led U.S. Senate voted 99-1 to eliminate a 10-year federal moratorium that would have prevented states from regulating artificial intelligence (AI). This amendment was added to President Trump’s extensive tax-cut and spending legislation during a lengthy session known as a "vote-a-rama."

Republican Senator Marsha Blackburn introduced the amendment to strike the ban on state-level AI regulation. The lone senator supporting the original ban was Republican Thom Tillis. The overall tax bill then narrowly passed the Senate with a 51-50 vote.

Details of the Removed Ban

The original Senate version sought to restrict states from regulating AI if they wanted to access a new $500 million fund dedicated to AI infrastructure. Major AI companies, including Google and OpenAI, had backed this restriction, arguing that a patchwork of state rules could hinder innovation.

However, many state leaders and lawmakers pushed back. Senator Maria Cantwell, top Democrat on the Commerce Committee, emphasized the importance of state consumer protections. She noted states’ efforts to tackle issues like robocalls, deepfakes, and autonomous vehicle safety.

Pushback from Governors and Compromise Attempts

A coalition of 17 Republican governors urged Congress to reject the moratorium. Arkansas Governor Sarah Huckabee Sanders commented that the removal would enable states to protect children from unregulated AI risks.

Earlier, Blackburn reached a compromise with Senate Commerce Committee Chair Ted Cruz, proposing a 5-year limit on the ban and allowing state regulations on specific issues such as protecting artists’ voices and child online safety—provided these laws did not create excessive burdens on AI development. Blackburn later withdrew support for this compromise before the amendment vote.

Blackburn explained her stance by highlighting the need for federal legislation, such as the Kids Online Safety Act and a broader online privacy framework, before states should be blocked from enacting protective laws.

What This Means for AI Regulation

• States retain authority to regulate AI-related concerns, particularly around consumer protection and safety.
• Federal funding for AI infrastructure will not be conditioned on states foregoing AI regulations.
• Federal lawmakers remain divided on the best approach to AI governance, balancing innovation with public safety.

This development signals a shift toward a more decentralized approach to AI oversight, at least until comprehensive federal legislation is enacted. Stakeholders in government and legal sectors should monitor ongoing debates and emerging laws at both state and federal levels.

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