State legislatures are taking the lead on AI regulation after a proposed federal moratorium failed in Congress. With no meaningful federal rules in place, all 50 states are pushing AI laws in 2025, focusing on government use, health care, facial recognition, and generative AI.
Government AI is under microscope for bias risks. States like Colorado require AI developers to disclose risks and ensure transparency. Montana’s new “Right to Compute” law demands risk management frameworks for AI tied to critical infrastructure. New York created oversight bodies with regulatory authority.
Health care AI is a hot topic. In the first half of 2025, 34 states proposed more than 250 bills covering disclosure, consumer protection, AI use by insurers, and clinical applications. The goal: stop discrimination and give users ways to challenge AI decisions. 
Facial recognition faces strict scrutiny. Widely used in policing and security, it struggles with racial bias. Fifteen states now have laws limiting harms, demanding vendor bias reports and human review. Cases like Porcha Woodruff’s wrongful arrest spotlight the stakes.
Generative AI regulation is hitting states fast. Utah’s policy requires clear disclosure when generative AI interacts with users, especially in advice or data collection scenarios. California’s AB 2013 demands transparency on training data for foundation models to protect copyright owners.
The Trump administration’s July 2025 AI Action Plan warns federal funds will avoid states with “burdensome” AI regulations. This threatens to stifle state efforts to regulate privacy and civil rights in AI.
“The Federal government should not allow AI-related Federal funding to be directed toward states with burdensome AI regulations … “
State patchwork rules are complicating compliance but filling a critical oversight void where Washington isn’t acting. AI developers and policymakers will be watching how this tug-of-war plays out.
Numerous bills in state legislatures aim to regulate the use of AI in health care, including medical devices like this electrocardiogram recorder.
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Porcha Woodruff was wrongly arrested for a carjacking in 2023 based on facial recognition technology.
AP Photo/Carlos Osorio
