Which AI laws have small business exemptions and what the thresholds are. Here is what Indiana businesses need to know in 2026.
Indiana has enacted SB 0149 — AI Systems. State agencies must inventory and report AI systems. Private sector disclosure guidelines issued.
State law does not replace federal law — you must comply with both. These federal rules apply to small business ai nationwide:
Indiana's SB 0149 — AI Systems often includes size-based exemptions. Businesses with fewer than 25 employees may be exempt, but should verify thresholds. Always review the specific statute for employee count and revenue thresholds.
The key deadline in Indiana is July 1, 2026. The law is enacted and compliance is required by the deadline above.
Indiana penalties for AI non-compliance: Civil penalties. While enforcement is still developing, companies found non-compliant face civil penalties and potential litigation.
Federal law does not currently preempt state AI laws. Indiana's SB 0149 — AI Systems applies independently of federal rules. Federal laws like ECOA, FCRA, and HIPAA also apply alongside state law — so you must comply with both.
Best practice: document all AI systems used, conduct an internal audit, implement required disclosures, and keep records for at least 3 years. For high-risk uses like small business ai, consider hiring an independent third-party auditor to validate compliance.
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