Senate upholds ban on State AI laws in Trump's budget bill

As Republicans in Congress push to pass Donald Trump’s so-called "Big Beautiful Bill" by July 4, the Senate parliamentarian has been quietly reviewing its sweeping provisions. While some controversial items — like proposed SNAP spending cuts — have been removed, one surprising element has remained intact: a 10-year moratorium blocking states from regulating artificial intelligence.

According to Senate Budget Committee Democrats, the Senate parliamentarian said that the AI moratorium complies with the special budgetary rules Republicans are using to advance the bill. If passed, the measure would bar states from enforcing new AI regulations for a decade and would penalize those that do by withholding federal broadband funding.

The provision isn’t final yet — it can still be challenged on the Senate floor and only needs a simple majority vote to be struck from the bill. Still, it has drawn bipartisan backlash. Georgia Rep. Marjorie Taylor Greene, notably, admitted she hadn’t read the bill and said she would have voted against it had she known the provision was included.

If the spending package passes as is, it would mark a major win for tech companies eager to avoid a fragmented landscape of state-level AI laws. With no sweeping federal AI framework in place, states have been left to navigate a complex mix of data privacy, copyright, and algorithmic governance issues on their own. This moratorium would effectively freeze those efforts in their tracks.

So far, 47 out of 50 US states have either enacted or proposed some form of AI legislation, reflecting broad, bipartisan concern over the technology’s unchecked growth. More than 200 state lawmakers from both parties have urged Congress to scrap the moratorium, warning it could override a wide range of consumer protection laws.

These include regulations aimed at safeguarding children’s online safety, addressing harms from generative AI, and overseeing how governments adopt and deploy AI systems.