Understanding TRAIGA: Texas AI Regulation Guide
If your business uses artificial intelligence in any capacity from AI-powered hiring tools to automated customer service chatbots to predictive analytics, you are now subject to a new Texas law for AI Regulation that went into effect on January 1, 2026.
The Texas Responsible Artificial Intelligence Governance Act, known as TRAIGA, creates the first comprehensive AI regulation framework in the state and carries penalties that can reach six figures per violation.
For many business owners, this law arrived quietly. While the headlines focused on federal AI debates in Washington, Texas moved ahead with its own framework, one that now governs how every company operating in the state develops, deploys, or uses AI systems.
Here’s What You Need to Know to Protect Your Business: Who Do These AI Regulations Apply To?
TRAIGA applies broadly to two categories of businesses. “Developers” are companies that design, code, or substantially modify AI systems. “Deployers” are businesses that use AI systems (even off-the-shelf products built by someone else) in the course of their operations. If you purchased an AI-powered tool from a vendor and your Texas-based employees or customers interact with it, you are likely a deployer under this law.
The scope is intentionally wide. TRAIGA covers any “machine-based system that, for any explicit or implicit objective, infers from the inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations that can influence physical or virtual environments.” That definition captures far more than the sophisticated AI platforms most people picture. It can include the recommendation algorithms in your e-commerce software, the screening tools in your HR tech stack, and the fraud detection systems in your payment processing.
What TRAIGA Prohibits
The law draws clear lines around several categories of prohibited conduct. Businesses cannot develop or deploy AI systems with the intent to unlawfully discriminate against individuals based on protected characteristics. They cannot use AI in ways that intentionally incite self-harm, harm to others, or criminal activity. And the law specifically prohibits AI systems designed to infringe on individuals’ constitutional rights.
A critical distinction here is that TRAIGA uses an intent-based liability framework. Unlike some other states’ approaches that create strict liability for discriminatory outcomes (meaning you could be liable even if you had no idea your AI system was producing biased results), Texas requires proof that the developer or deployer intended the prohibited outcome. This is a meaningful difference for businesses making good-faith compliance efforts.
Your Core Compliance Obligations for TRAIGA: Take These Steps
Even with the intent-based framework, TRAIGA imposes real obligations on businesses. At its core, the law requires companies to demonstrate accountability, transparency, and responsible governance of their AI systems.
Practically, this means you need to take the following steps. First, establish an internal AI governance policy. This does not need to be an elaborate document, but it must address how your organization identifies, assesses, and mitigates risks associated with any AI tools you use.
Second, document your AI systems — what data they use, what outputs they produce, what decisions they influence, and what safeguards are in place.
Third, implement testing procedures, including adversarial or “red team” testing where feasible, to identify potential failures or harmful outputs before they affect your customers or employees.
If your business handles biometric data — fingerprints, facial recognition, voiceprints — TRAIGA adds another layer. Companies may not use biometric identifiers for commercial purposes without first obtaining informed consent from the individuals whose data is being collected. The law does permit the use of biometric data for AI model training, but once those trained models are deployed commercially, consent requirements apply.
The Safe Harbors That Can Protect You
TRAIGA includes several safe harbor provisions designed to reward businesses that invest in genuine compliance. You may have a complete defense to liability if you can demonstrate that you discovered a violation through your own internal testing or review processes, that you substantially comply with the NIST AI Risk Management Framework (a nationally recognized set of best practices published by the National Institute of Standards and Technology), that you followed applicable state agency guidelines, or that a third party misused your AI system in a way you could not reasonably have anticipated.
The NIST AI Risk Management Framework alignment is particularly worth noting. If your organization has not yet reviewed this framework, doing so now gives you a practical compliance roadmap and simultaneously builds the strongest available affirmative defense under TRAIGA. We advise our clients to treat NIST alignment not as optional but as the baseline standard for AI governance.
What Happens If You Don’t Comply with these AI Regulations?
The Texas Attorney General has exclusive enforcement authority over TRAIGA. Before filing an enforcement action, the AG must provide written notice of the violation and allow a 60-day cure period — giving businesses an opportunity to fix the problem before facing penalties. However, once that cure period expires, the financial exposure escalates quickly: $10,000 to $12,000 per curable violation, $80,000 to $200,000 per uncurable violation, and $2,000 to $40,000 per day for continuing violations.
Those numbers can compound rapidly for a business running AI systems that touch thousands of transactions or customer interactions. And notably, the Texas AG has been aggressive in its enforcement posture on technology-related regulations generally — the office’s vigorous enforcement of the Texas Data Privacy and Security Act over the past two years signals that TRAIGA enforcement should be taken seriously.
One Thing You Can Do This Week
If you have not already begun your TRAIGA compliance efforts, start with an AI inventory. Identify every AI-powered tool, platform, or system your business uses. Include everything from your CRM’s predictive lead scoring to your accounting software’s anomaly detection. For each system, document what it does, what data it accesses, who it affects, and whether your organization is acting as a developer, a deployer, or both. This inventory becomes the foundation for your governance policy, your risk assessment, and ultimately your safe harbor defense.
Texas’s approach to AI regulation is notable for balancing innovation with accountability. The regulatory sandbox program — which allows approved participants to test innovative AI applications for up to 36 months without obtaining standard state licenses — demonstrates the state’s interest in fostering, not stifling, technological advancement. But the law also makes clear that businesses are expected to use AI responsibly and transparently.
If you have questions about how TRAIGA applies to your business or need help developing an AI governance framework, we are here to help. Reach out to our team at Kelley Clarke to discuss your compliance strategy.
This article is for informational purposes only and does not constitute legal advice. The information provided should not be acted upon without consulting with a qualified attorney regarding your specific situation.
