Key Takeaways

  • Federal legislation preempting state AI regulations could save the federal government approximately $600 billion by 2035, creating a "fiscal dividend," according to an analysis by the Computer & Communications Industry Association (CCIA).
  • The study was released Friday (Nov. 21) via a blog post, coinciding with reports that lawmakers are considering including such preemption provisions in the must-pass annual National Defense Authorization Act (NDAA).
  • "Congress should seize this rare policy lever that promotes innovation, prosperity, and fiscal responsibility all at once," CCIA Chief Economist Trevor Wagener said in the blog post. The trade association lobbies on behalf of companies such as Amazon, Apple, Meta, and Google.

In-Depth Analysis

According to Wagener, the savings between 2026 and 2035 would come from two sources: approximately $39 billion in reduced federal procurement costs due to increased contractor productivity, and approximately $561 billion in increased federal tax revenue resulting from AI-driven productivity gains that boost GDP growth.

Currently, state AI laws are proliferating rapidly, creating a complex patchwork of regulations that imposes multiple compliance requirements on businesses. This issue is drawing increasing attention in Washington.

"We must have a federal standard, not a patchwork of 50 state regulatory regimes," President Donald Trump said in a Truth Social post on Nov. 18. "Otherwise, China will easily catch up to us in the AI race. Put it in the NDAA, or pass it as a standalone bill, and no one will be able to compete with the United States."

The Trump administration's AI action plan released in July called for measures to eliminate "bureaucratic red tape" at the federal and state levels that could stifle emerging markets.

Facing growing opposition, the White House has paused a draft executive order aimed at preempting state AI regulations through litigation and withholding federal funds, according to a recent Reuters report.

In the final stages of the so-called "Big Beautiful Bill" in July, the Senate removed a provision that would have imposed a 10-year moratorium on state AI regulations. An earlier attempt by Senate Commerce Committee Chairman Ted Cruz, a Texas Republican, to push through a compromise also failed.

Recently, the push to preempt state AI legislation has faced opposition from bipartisan officials across multiple states, including prominent Republicans such as Florida Governor Ron DeSantis and Arkansas Governor Sarah Huckabee Sanders. Republican opponents on Capitol Hill include Senator Josh Hawley (Missouri) and Representative Marjorie Taylor Greene (Georgia).

"Stripping states of their jurisdiction to regulate AI is a subsidy to Big Tech and would prevent states from protecting citizens against online censorship of political speech, predatory apps targeting children, intellectual property infringement, and data centers' encroachment on electricity/water resources," DeSantis said in an X post on Nov. 18.

According to a review by the nonprofit Transparency Coalition, which supports AI regulation, more than 24 states have enacted over 70 new AI laws so far this year. The coalition stated that deepfakes and chatbot safety have become the most pressing issues in AI regulation in 2025. Additionally, several states have addressed AI applications in areas such as healthcare, insurance, and law enforcement.

Wagener said in the blog post that without federal preemption legislation, states could pass an average of two to three AI-related laws per year for the foreseeable future. This could lead to conflicting laws, fragmenting the market to the point where "AI deployment, adoption, and innovation crawl along."