The 'One Big, Beautiful Bill' passed by the Senate on Tuesday will continue to allow states to regulate AI and stands to reshape U.S. energy policy.
President Donald Trump's originally proposed bill -- largely focused on tax policy -- included a 10-year pause on state AI law enforcement and rescission of clean energy tax credits and incentives from the Inflation Reduction Act (IRA) of 2022. While IRA cuts remain in the "One Big, Beautiful Bill," the Senate voted 99-1 on an amendment to remove the state AI law moratorium, which would have constricted states' ability to regulate AI.
"The 99-1 overwhelming rejection of the AI moratorium pretty much affirms that lawmakers can't serve two masters," said Forrester principal analyst Alla Valente. "They can't serve their constituents and Silicon Valley. Something's got to give because the risk appetite around AI is very different."
The House could oppose some of the Senate's changes to the One Big, Beautiful Bill, or fail to approve it altogether, but little time is left before Trump's July 4 deadline. Should the Senate's changes remain in effect, they stand to have broad significance for U.S. business investments in AI and energy.
Senate removes state AI law moratorium
The Senate eliminated language on the state AI law moratorium, meaning states will be able to continue introducing and enforcing their own AI regulations.
While the state AI law moratorium may have caused states to pause any new AI rules, Valente said Congress eliminating the moratorium could push states to revisit and revise AI rules to consider new technologies, such as generative AI.
This signals that AI needs guardrails.
Alla ValentePrincipal analyst, Forrester
Businesses had expressed concerns about the growing patchwork of state AI laws making regulatory compliance complex and costly. Valente said eliminating the state AI law moratorium creates an opportunity for Congress to craft its own AI framework for U.S. businesses.
"This signals that AI needs guardrails," Valente said.
Lauren Bresette, senior manager of government relations at the Security Industry Association, said she had supported pausing state AI law enforcement to allow for a learning period for legislation to provide consistency and predictability in the market for businesses.
However, without the state AI law moratorium, companies will need to return to the status quo in navigating differing state AI policies.
"In the meantime, we're not entirely discouraged by the removal of this provision," she said. "Even though they decided not to put this learning period in, to have a pause on the influx of state legislation, I do think there's still a demand for federal legislation that would preempt state laws."
Bresette said there is support for the federal government to create an AI legislative framework that would "bring that uniformity and clarity that businesses want to reduce their compliance burdens."
U.S. energy policy shifts with IRA tax credit cuts
The Senate's version of the One Big, Beautiful Bill retains cuts to clean energy tax incentives provided under the IRA, ending tax credits for clean energy projects that will start operations after 2027. The bill also ends tax deductions for energy-efficient building investments.
The clean energy tax cuts also apply to a number of consumer incentives, including the $7,500 electric vehicle credit and installation of clean energy technologies such as solar panels on homes.
The IRA, which passed during former President Joe Biden's administration, incentivized companies to invest in clean energy options like wind and solar, as well as new and emerging energy sources such as geothermal. Since then, big tech vendors including Google, Meta and Microsoft have funneled investments into clean energy sources to power AI data centers across the U.S.
Daniel Castro, vice president at the Information Technology and Innovation Foundation, said the IRA cuts demonstrate a move away from domestic clean energy production. Removing investment incentives and tax credits from the clean energy industry will represent a "net loss" in terms of manufacturing jobs and further investments in the U.S., he said.
"The message of the last administration was very clear, they see this as a future industry for the U.S. and they want investors to come here and invest, and the government has their back," Castro said. "This is sending the complete opposite message."
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
