Several State AI Laws Set to Take Effect in 2026
As the federal government moves to eliminate state-level regulations on artificial intelligence (AI), states like Illinois, Texas, and Colorado are set to implement their own laws governing AI in the workforce starting in 2026.
Federal Government’s Directive
On December 11, 2025, President Donald Trump signed an executive order titled “Ensuring a National Policy Framework for Artificial Intelligence.” This order mandates a review of state laws considered “inconsistent” with the federal government’s plans for a national policy framework.
Illinois AI Law
Effective January 1, 2026, Illinois will implement H.B. 3773, which amends the state’s human rights act. This legislation specifies that discrimination stemming from AI decisions in hiring, firing, discipline, tenure, and training is actionable. Key components of the law include:
- Employers must notify workers when AI is involved in workplace decisions.
- Companies are prohibited from using ZIP codes in AI evaluations of candidates.
Since these protections are part of Illinois’ human rights code, they come with a private right of action.
Texas AI Law
Texas introduces the Texas Responsible Artificial Intelligence Governance Act, which aims to balance public safety, individual rights, and privacy while promoting AI innovation. Key features include:
- Establishment of a sandbox program for testing AI systems with reduced regulatory risks.
- Creation of a state council to support innovation and oversee compliance.
- Unlike Illinois, this law does not provide a private right of action.
Texas also asserts that a showing of disparate impact is insufficient to prove discriminatory intent.
Colorado AI Law
Colorado’s measure, S.B. 24-205, is particularly significant as it aims to protect consumers from algorithmic discrimination. Important aspects of this law include:
- Companies using high-risk AI systems must take reasonable measures to avoid algorithmic discrimination.
- Mandatory disclosures regarding the use of AI systems.
- Businesses and government agencies are required to conduct impact assessments and notify workers about AI involvement in employment decisions.
- Applicants or employees must have the opportunity to appeal AI decisions.
This law will take effect in June 2026 and, similar to Texas, does not allow for a private cause of action; enforcement is the responsibility of the state attorney general.
Conclusion
Despite the federal government’s attempts to streamline AI regulations, the state laws in Illinois, Texas, and Colorado remain valid and enforceable. Employers in these states should prioritize compliance with these new regulations as they approach 2026. As the landscape of AI law evolves, expert guidance will be crucial for navigating these complexities.
