Texas AI Regulation 2025: Essential Facts About TRAIGA Compliance and Requirements

Introduction to TRAIGA: Texas Takes the Lead in AI Regulation

Texas has established itself as the frontrunner in state-level artificial intelligence monitoring with the Texas Responsible AI Governance Act (TRAIGA). This legislation is now the most comprehensive AI regulation in the United States, setting high standards for transparency, risk management, and consumer protection. TRAIGA focuses on specific prohibitions and governmental agency duties, setting clear boundaries for AI use to promote transparency, risk management, and consumer protection. The act was passed by Texas lawmakers in May 2025 and takes effect on January 1, 2026, signaling a new era in responsible AI governanceTransparency Coalition.

This foundational approach is expected to reshape both public and private sector practices across domains where AI impacts people’s lives.

Scope and Applicability: Who Needs to Comply

Entities Subject to TRAIGA

TRAIGA’s reach is broad and affects many organizations. Any entity conducting business in Texas or impacting Texas residents with their AI systems falls under the law’s jurisdiction, even if their headquarters are outside the state. Companies operating nationwide or globally must comply if their AI touches Texans. This ensures the protection of local consumers, regardless of where technology originates [orrick.com].

Determining Applicability

The defining factor for applicability is whether an AI system’s outputs affect Texas residents. It is not the physical location of the company or its servers that determines compliance, but the impact made within the state. This makes TRAIGA a practical and strategic approach to regulating AI use across multiple domains.

Understanding who must comply with TRAIGA sets the stage for examining specific actions and uses of AI that the Act prohibits.

Prohibited AI Uses Under TRAIGA

Banned AI Applications

TRAIGA sets clear boundaries for AI use by prohibiting certain harmful applications. The law bans intentionally developing or deploying AI to encourage self-harm, incite violence, or aid criminal acts. This includes systems purposefully designed to manipulate behavior or use deceptive methods to bypass informed decisions. Such practices are seen as unacceptable risks, mirroring global trends to prevent manipulation by AI ey.com.

Biometric Data and Consent

The Act restricts the use of biometric identification systems without express consent. Specifically, government entities cannot develop or deploy AI that captures or analyzes biometric identifiers, such as facial recognition or fingerprinting, for surveillance or classification purposes. These limitations safeguard privacy and deter mass surveillance using AI technologies orrick.com.

Social Scoring Systems

TRAIGA blocks the use of government AI for social scoring, which means ranking or classifying individuals based on social behavior or personal characteristics. This practice can restrict civil liberties and lead to unfair profiling, so the law targets such systems operated by government agencies lumenova.ai.

Manipulation and Informed Decision-Making

There is a strong prohibition on AI that manipulates users to circumvent their ability to make voluntary, informed decisions. This includes using subliminal techniques or deceptive mechanisms intentionally designed to distort behavior, especially in sensitive contexts. The emphasis is on preventing AI-driven exploitation and manipulation mitchellwilliamslaw.com.

TRAIGA’s prohibitions are focused and precise, establishing a clear ethical baseline for AI development and deployment. This approach helps prevent the misuse of AI while supporting responsible technological progress.

Historical Context: Key Requirements Explored in Earlier TRAIGA Drafts

It's important to understand how TRAIGA evolved. While the final bill that passed focused on specific prohibitions and governmental agency duties, earlier drafts of TRAIGA (and legislative discussions) featured more explicit and broad requirements for what were termed "high-risk" AI systems. These provisions, which were largely narrowed or removed in the final version, included:

Earlier Requirement (Removed/Narrowed): Documentation for Generative AI Developers

Under the original version of TRAIGA, developers of generative AI systems were required to keep detailed records of all training data used in system development. This included information about the data’s origin, type, and composition. The aim was to ensure accountability and traceability, so that any issues or biases within the generated output could be linked back to specific data sources. Such documentation helps stakeholders understand how AI models make decisions, supporting transparency and responsible use Texas Legislature Online.

Earlier Requirement (Removed/Narrowed): Disclosure in Consequential Decision-Making

TRAIGA originally mandated that organizations must disclose when an AI system is involved in making consequential decisions about individuals. This applied to high-stakes areas like employment, housing, education, and healthcare. When AI played a role that could significantly impact a person’s life—such as denying a job application or a loan—companies had to inform affected individuals, explaining the AI’s involvement in the outcome cimphony.ai.

Earlier Requirement (Removed/Narrowed): Risk Assessment and Mitigation

Initially, the legislation required developers and deployers to assess and document risks associated with each high-risk AI system. This involved identifying potential harms, analyzing possible impacts, and defining strategies to reduce those risks, especially discrimination or unintended bias. Ongoing monitoring and clear records were important to show that responsible measures were in place at all stages of the AI’s lifecycle lumenova.ai.

While these specific broad requirements for 'high-risk' systems were adjusted in the final bill, the underlying principles of transparency and responsible AI development remain foundational for organizations operating in Texas.

Moving forward, TRAIGA's obligations for transparency and fairness primarily extend to how government agencies use AI when serving the public.

Government Agency Obligations

Disclosure to Consumers

Government agencies in Texas that use AI systems must openly inform individuals when AI plays a role in consumer interactions. This means agencies are required to provide clear notifications to residents before or at the time an AI system is used for decisions that may impact them. This mandate ensures transparency and allows people to understand when technology, rather than a person, is influencing outcomes that affect services or benefits.

Prohibitions on Social Scoring and Manipulation

TRAIGA explicitly forbids government agencies from using AI for social scoring. Social scoring involves rating individuals based on personal data, potentially affecting their access to services or opportunities. By banning this practice, TRAIGA protects residents from discrimination or unfair treatment tied to non-transparent metrics. Additionally, agencies may not employ AI to manipulate public behavior or to bypass informed consent, assuring ethical standards are maintained.

Transparency in Public Interactions

Whenever AI systems directly interact with members of the public, government entities must ensure transparency. This involves clear explanations about the AI’s capabilities, limitations, and the degree of autonomy in decision-making. Such transparency helps individuals make informed choices and builds trust in digital government services.

These measures collectively strengthen public confidence in government use of AI and uphold a foundation of accountability and ethical usage.

Enforcement Mechanisms and Penalties

Role of the Texas Attorney General

The Texas Attorney General’s office is responsible for investigating and enforcing violations of the Texas Responsible AI Governance Act (TRAIGA). Any potential breach of the Act is reported through an online mechanism created specifically for this purpose. The Attorney General handles investigations and, when needed, brings enforcement actions on behalf of the state. There is no private right of action, so only the Attorney General may take legal steps related to TRAIGA compliance texasattorneygeneral.gov.

The Right to Cure Violations

Before any penalty is imposed, the Attorney General must offer notice to the alleged violator. Organizations are then given a 60-day window to correct the issue once notified. If they resolve the violation within this period, further enforcement actions or fines can typically be avoided. If the problem remains uncured after 60 days, more serious steps, including injunctions and financial penalties, may follow transparencycoalition.ai.

Penalties and Fines

For violations that do not involve unacceptable uses, penalties range from $10,000 to $12,000 per violation. If the violation involves unacceptable AI practices—such as intentional harm or unlawful discrimination—fines can be much higher, between $80,000 and $200,000. Entities found to be in continued violation after notice face daily fines from $2,000 up to $40,000 until the issue is resolved. These strict fines are designed to discourage non-compliance and drive accountability.

Adherence to these enforcement protocols is essential, as the regulatory environment for AI in Texas continues to take shape.

Exemptions and Innovation Provisions

No Relief for Small Business

While earlier legislative discussions included potential relief for small businesses, the final version of TRAIGA (HB 149) does NOT include a general small business exemption. Therefore, if a business meets the broad applicability criteria, its AI systems are subject to TRAIGA's provisions regardless of company size. This is a critical point for all Texas businesses to understand and prepare for.

The AI Regulatory Sandbox

To encourage responsible experimentation, TRAIGA launches a regulatory sandbox program. This provides developers with a controlled environment to test AI systems. Participants receive relief from certain rules, which fosters innovation while maintaining oversight. The sandbox allows up to 36 months of operation for each project, striking a balance between public safety and technological advancement Texas Tribune.

Duration and Limitations

The 36-month grace period allows teams to refine AI products before broader compliance is required. After this period, all usual regulations apply. While this initiative supports early-stage development, companies must prepare to transition to full compliance within the allotted time frame lumenova.ai.

TRAIGA’s approach is designed to balance protection and innovation as Texas adapts to the evolving AI landscape.

TRAIGA Compared to Other AI Regulations

Similarities with the EU AI Act

TRAIGA closely follows the European Union’s risk-based approach. Like the EU AI Act, Texas assesses AI systems based on potential risks, using categories that reflect impact—minimal, limited, high, or unacceptable. High-risk AI applications face stricter requirements, including documentation, transparency, and regular risk assessments. Both laws also ban AI uses deemed “unacceptable,” such as systems that cause significant harm or enable social scoring europarl.europa.eu.

Key Differences with the EU AI Act

While earlier versions were poised to align more closely with a risk-based approach and expand high-risk AI definitions, the final TRAIGA bill pivoted. It focuses instead on specific prohibitions and governmental agency obligations rather than a broad, tiered risk-based framework for all AI.

This more expansive definition increases the number of companies and government agencies that must comply. The Texas law also narrows legal claims by clarifying that unintentional disparate impacts (where an algorithm’s outcome is biased without intent) are not enough alone to prove a violation—intent must be shown.

TRAIGA sets a 60-day window for organizations to correct violations before receiving penalties—this grace period differs from the EU’s detailed enforcement regime. Notably, Texas’s rules emphasize real-world harms such as privacy violations and discrimination, rather than hypothetical risks.

Contrast with Colorado AI Law

Colorado’s Artificial Intelligence Act, another state-level law, also uses a risk-based model. However, it offers several exemptions for entities already heavily regulated under other laws, such as health care and insurance providers. Colorado focuses mainly on requiring consumer notices when AI is involved in important decisions and limits requirements for certain sectors FPF.
Texas, meanwhile, imposes its risk-based framework regardless of other industry regulations and applies stricter prohibitions on manipulation and biometric collection. Texas regulators also emphasize transparency in government use and establish a regulatory sandbox for innovation nquiringminds.com.

Influence on Federal Regulation

As one of the most comprehensive AI laws in the U.S., TRAIGA may set a precedent for federal action. Its balance of consumer protection and support for innovation provides a model that other states—and perhaps future national policymakers—could follow Dallas Innovates. Texas’s actions may ultimately shape a more unified approach to AI governance across the country.

With TRAIGA’s broad scope and pioneering framework, organizations are beginning to look closely at the changes they’ll need to make to stay compliant in this evolving regulatory environment.

Preparing Your Organization for TRAIGA Compliance

Assessing Existing AI Systems

Organizations should start by performing a thorough review of all AI systems in use, focusing on those deployed in hiring, finance, healthcare, housing, education, or insurance. Classify each system according to TRAIGA’s risk categories. Pay attention to whether any system could significantly affect Texas residents, as this triggers compliance obligations regardless of your business location.

Establishing Documentation and Disclosure

Maintain clear records detailing training data sources, development processes, and intended uses, especially for generative AI. Ensure that proper disclosures are in place whenever AI helps make consequential decisions. Documentation should be easy to update and ready for inspection to demonstrate compliance if requested. This makes it easier to respond quickly in the event of audits or consumer inquiries.

Implementing Risk Management Practices

Develop risk management frameworks that identify, assess, and address potential risks posed by your AI systems. This includes regular testing for bias, setting up escalation channels for consumer appeals, and providing plain-language explanations for significant AI-driven outcomes. Everyone involved with the AI’s design, deployment, or oversight should understand these principles and their responsibilities.

With strong preparation and a structured approach to compliance, organizations can meet both their regulatory obligations and public expectations.

The Future of AI Governance Beyond TRAIGA

TRAIGA as a Blueprint for Broader Regulation

TRAIGA positions Texas as a national leader, with its regulatory approach likely to shape both state and federal efforts. As one of the first comprehensive frameworks, TRAIGA demonstrates how structured oversight can balance innovation and public interest, offering a reference point for other legislatures considering AI policy. Texas’s large technology sector and political influence further underline TRAIGA’s potential to become a national benchmark, similar to how past state laws have influenced data privacy debates Lumenova.ai.

Navigating the Innovation-Regulation Balance

Finding equilibrium between fostering AI innovation and enforcing regulation is a persistent challenge. Well-designed policies can encourage responsible development, but unclear or inconsistent rules may slow progress or deter investment ForbesBusinessCouncil. TRAIGA attempts to strike this balance by introducing measures like the regulatory sandbox, allowing developers to experiment before full compliance, while protecting consumers from harmful uses.

Future Trends and Adaptive Governance

AI technology advances rapidly, demanding flexible policy approaches. Effective AI governance in the future will likely center on adaptive frameworks, clear risk assessment, and ongoing dialogue between stakeholders to keep laws relevant as technology evolves Stimson. Governments and organizations are expected to implement robust risk management and accountability practices. As AI spreads into daily activities and critical infrastructure, the importance of transparent, ethical, and forward-looking governance will only increase.

By placing responsible innovation at its core, TRAIGA marks a significant step towards trustworthy AI use. This dynamic environment will continue to shape how organizations operate with emerging technologies.

Closing Thoughts

As AI adoption accelerates, regulations like TRAIGA are not just inevitable — they’re necessary. Texas has taken a bold step to ensure that innovation doesn’t outpace accountability. For developers, deployers, and business leaders, the message is clear: now is the time to operationalize responsible AI.

At WhitegloveAI, we help organizations move beyond checkboxes. Our AI Adoption & Management Framework (AI-AMF) provides a clear, secure, and scalable approach to align with TRAIGA — and future AI laws likely to follow.

Want to stay ahead of what's next?

👉 Follow WhitegloveAI on LinkedIn for expert analysis, updates on the TRAIGA compliance timeline, and details on our June 11th webinar, where we’ll break down what the law means and how to prepare.

Compliance isn’t just a legal requirement — it’s your opportunity to lead with trust.

— The WhitegloveAI Team