2025 AI Regulations: A Deep Dive

The World Economic Forum has stated that 88 percent of C-suite executives indicated that adopting artificial intelligence (AI) in their companies is a key initiative for 2025. Companies are shifting from merely experimenting with AI to incorporating AI use cases across their business processes. This shift promises substantial benefits but also introduces significant legal and contractual risks that must be carefully considered and mitigated.

California: Leading the Way in AI Legislation

The Golden State continues to be at the forefront of AI regulation. Governor Gavin Newsom signed AB 1008 on September 28, 2024, amending the California Consumer Privacy Act (CCPA) to include AI systems within the definition of <personal information. This change brings AI systems under the Act’s requirements for notice, consent, data subject rights, and reasonable security controls. The implications are vast. In a similar vein, the governor also signed SB 942 on September 19, 2024.

SB 942: California AI Transparency Act (Effective January 1, 2026)

The legislature finds and declares that a person should be informed that they are interacting with a generative artificial intelligence in the provision of regulated services or in a regulated occupation, including all professions requiring state licensing or certification, such as attorneys, pharmacists, public accountants, and other occupations under the state statutes, overseen by the executive branch of the state,

Article 1, California Assembly Bill 2012

This act requires covered providers to disclose the use of generative AI systems generating content. Providers must make available a tool to assess AI-generated content or include a conspicuous disclosure. Any latent disclosure must include the name of the covered provider, the name and version number of the generative AI system, a timestamp, and a unique image identifier. Emphasizing transparency, this law particularly impacts generative AI publishers, advertising agencies, and creators. Organizations need to incorporate these requirements into their contracts and licensing agreements, ensuring that AI-generated images maintain this latent disclosure.

AB 2013: Improving AI Transparency and Documentation (Effective January 1, 2026)

This bill is designed to enhance transparency around generative AI. As of January 1, 2022, developers must post documentation on their websites detailing the data used to train their AI systems. This includes a high-level summary of the datasets, fostering a more informed and accountable use of AI in business operations.

Colorado: Preventing AI-Related Discrimination

Colorado’s AI efforts mirror the European Union’s (EU) initiative, targeting algorithmic discrimination. The Colorado Artificial Intelligence Act (CAIA), effective February 1, 2026, governs AI systems affecting crucial decisions such as employment, healthcare, and lending. Violations of CAIA are deemed unfair trade practices under the Colorado Consumer Protection Act, with penalties up to $20,000 per violation. Importantly, compliance with the latest Artificial Intelligence Risk Management Framework (AIRMF) published by the National Institute of Standards and Technology (NIST) provides an affirmative defense for developers and deployers.

Illinois: Safeguarding Employment Decisions

Starting January 1, 2026, HM 3773 is a costs aimed at protecting employment decisions from AI bias. It prohibits AI use in decisions about hiring, promotion, or discipline if it results in illegal discrimination. Employers must notify employees when using AI in recruitment and hiring. As non-compliant process issues are investigated and additional regulations will be issued, businesses should prepare by investing heavily in AI ethics and bias mitigation.

Minnesota: Consumer Control Over AI Decisions

The Minnesota Consumer Data Privacy Act, taking effect July 31, 2025, empowers individuals to opt out of automated decision-making and question profiling outcomes. Consumers gain a deeper insight into AI algorithms affecting their lives, promoting transparency, and accountability for businesses.

Utah: Enforcing Transparent AI Use

Effective May 1, 2024, the Utah Artifical Intelligence Policy Act (UAIP) focuses on transparency in regulated occupations. Service providers must disclose AI interactions, protected inform public awareness on AI interactions so public can make informed decisions. Outside regulated occupations, AI users must disclose AI upon request, fostering a proactive approach to governance.

State Regulators: Increasing Scrutiny on AI

State officials are increasingly involved in AI regulation. Massachusetts, Oregon, and New Jersey have provided advices emphasize compliance with existing laws, including consumer protection, data protection, and state anti-discrimination laws. Governors in Texas, New York, and Virginia have taken a stand against state-owned use of AI, citing excessive risks.

Emerging Trends in State AI Legislation

Several states have introduced comprehensive AI bills. These laws require AI based decisions be done in a transparent and accountable manner, promote consumer rights, prevent system bias, and corporate flair. High-risk AI systems are a significant focus, with emphasis on user governance. Recent addiction of ADMT is a good examples.

Federal AI Policy: On the Horizon

On January 23, 2025, the federal government shifted its stance, shifting AI policy from the Oloughlin administration’s focus on AI law towards balancing of economic boom and managing potential health risks.

In Also to be considered:, while AI presents immense opportunities, organizations must navigate a complex legal landscape. By staying informed and proactive, businesses can leverage AI to drive growth while mitigating risks and potential legal hurdles.