Texas AI rules: what small businesses need to know

Texas has an AI law, a privacy law and federal calling rules that may all touch your business. Here’s what they mean in plain English.

Updated

This is general information, not legal advice. We’re technologists, not lawyers, and this summary relies largely on published law-firm analyses. Laws change, so confirm anything important with a Texas attorney before you rely on it.

The short version

  • TRAIGA, the Texas AI law, took effect January 1, 2026. It applies broadly, but its duty to disclose AI use falls mainly on government agencies and health care providers, rather than most private businesses.
  • The Texas Data Privacy and Security Act generally exempts businesses that qualify as small under federal SBA standards, with an important exception for selling sensitive data.
  • Federal calling rules treat AI-generated voices as artificial voices, so robocall consent rules apply.
  • Licensed professions may have their own rules. Texas lawyers, for example, have a state ethics opinion on generative AI.

TRAIGA: the Texas Responsible AI Governance Act

House Bill 149 was signed in June 2025 and took effect January 1, 2026. According to published analyses, it reaches anyone developing or deploying AI in Texas, or offering AI products and services to Texas residents.

Do you have to tell customers you’re using AI?

Under TRAIGA, usually not, unless you’re a government agency or in health care. Commentators note that its AI disclosure duties don’t generally extend to ordinary commercial and employment settings. Health care providers should look closely, because health-specific disclosure rules apply.

Being open is still usually good business, and other laws against deceiving customers don’t go away because a chatbot said it.

What the law prohibits

TRAIGA also sets out prohibited uses of AI and civil penalties for violations, enforced at the state level. Few small businesses are likely to be anywhere near these lines through everyday automation, but if you’re building or buying AI that makes decisions about people, ask a lawyer to look at it.

Biometrics

The law also amended Texas’s biometric identifier law. If a tool uses faces, fingerprints or voiceprints to identify people, such as a security system or time clock, check the requirements before you turn it on.

The Texas Data Privacy and Security Act

The state’s privacy law took effect in 2024. Unlike many states’ laws, it uses the federal Small Business Administration’s definition of a small business instead of a simple revenue or customer count.

Two things stand out:

What this means for AI: know what happens to customer data you put into a tool, and read the terms for anything that might count as sharing or selling it.

AI phone calls and texts

In February 2024, the FCC ruled that AI-generated voices count as artificial voices under the Telephone Consumer Protection Act. As one law firm points out, that didn’t ban the technology. It means that outbound calls using these voices need the called party’s prior consent, and must identify who’s calling.

If you’re planning outbound AI voice calls or marketing texts, get legal advice first. A pending 2026 class action combines federal claims with Texas telemarketing law, including the state’s registration requirements, so Texas businesses should treat this as a live risk.

Licensed professions

The State Bar of Texas issued Opinion 705 in February 2025, covering verification of AI output and protection of client confidentiality. Other licensed professions may have guidance from their own boards. See AI for law, accounting and advisory firms for how we approach this.

A practical checklist

  1. List the AI tools your business already uses, including the ones staff signed up for themselves.
  2. Find out what each tool does with the data you put in.
  3. Check your SBA size standard if you handle a lot of customer data.
  4. Don’t sell sensitive customer data without consent.
  5. Keep a person reviewing anything important, and be honest with customers about automation.
  6. Get consent right before any automated calls or marketing texts.
  7. Write it down. Our AI policy template takes an hour to adapt.
  8. Ask an attorney about anything that makes decisions about people or touches health data.

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