AI Laws in Indiana (IN)

What SB 0149 requires

Indiana has enacted SB 0149 — AI Systems. State agencies must inventory and report AI systems. Private sector disclosure guidelines issued. This page explains what the law requires in plain language, who is in scope, the penalty for non-compliance, and what your business needs to do before the July 1, 2026 deadline.

Who is in scope

The law covers businesses that use AI to interact with consumers, make consumer-facing decisions (credit, pricing, recommendations, content delivery), or generate AI content that is presented to the public, and Indiana state agencies that deploy AI for benefits determination, licensing, law enforcement, or public-service delivery; private-sector operators serving state contracts are also in scope. Company size does not determine whether you are in scope — a startup with ten employees using an off-the-shelf AI hiring tool has the same disclosure obligations as an enterprise running a custom-built model. What matters is whether the AI system makes or substantially informs a decision that affects a Indiana resident in a consequential way. Notably, the obligation extends to vendors: if your company deploys an AI tool built by a third party, you — as the deployer — are responsible for ensuring it meets Indiana's requirements, even if you did not build it.

Key compliance requirements

Indiana's consumer AI transparency requirements focus on two baseline obligations: disclosure and opt-out. Businesses must inform consumers when an AI system is involved in a consequential decision — meaning a decision that meaningfully affects a consumer's access to services, pricing, credit, or opportunities. The opt-out requirement gives consumers a mechanism to request human review or to decline AI-driven processing entirely. Meeting this standard is not just a notice-posting exercise: companies need to map every consumer-facing AI touchpoint, verify that their disclosure language is accurate and readable, and build a functioning human-review pathway that responds to opt-out requests within a defined window.

Indiana's AI law for public-sector systems requires state agencies to create and maintain an inventory of every AI tool used in government operations. Each entry in the inventory must describe the system's purpose, the decisions it informs, the data inputs, and the vendor or developer responsible for it. Agencies must also establish an appeals process so that individuals affected by an AI-assisted decision can request human review. For private-sector companies that provide AI tools to the state, contract language must address these transparency and accountability obligations — vendors who cannot demonstrate compliance may be excluded from procurement.

Penalties for non-compliance

The financial consequences of non-compliance under SB 0149 are real and enforceable now. Indiana sets a maximum civil penalty of Civil penalties. Penalties accumulate per violation — meaning a company that has deployed an AI tool to thousands of consumers without required disclosures faces compounding exposure, not a single capped fine. Consumer AI violations in Indiana may also attract federal coordination: the FTC's Operation AI Comply sweep (September 2024) demonstrated that state and federal enforcers share intelligence on companies with widespread AI disclosure failures.

What to do now

Build your AI inventory first. You cannot comply with Indiana's requirements if you do not know which systems are in scope. Map every AI or automated decision system your company uses that touches Indiana residents — including third-party vendor tools integrated into your product.

Draft accurate disclosure language. Work with legal counsel to produce disclosure statements that accurately describe what your AI does, what data it uses, and what the consumer can do if they want human review. Vague or boilerplate disclosures will not satisfy Indiana's requirements.

Build the opt-out pathway. Implement a functioning process for consumers to request human review or opt out of AI-assisted processing. Test it before the deadline — regulators will look for live, working mechanisms, not documented promises.

Review government contracts. If your company provides AI tools to Indiana state agencies, review pending and existing contracts to ensure they address the inventory, transparency, and appeals requirements that now flow through to vendors.

Assign a compliance owner. Designate someone — legal counsel, a privacy officer, or a dedicated AI governance lead — to track regulatory developments, own the audit documentation, and respond if an enforcement inquiry arrives. The compliance deadline is July 1, 2026. Don't wait until the deadline to start.

Indiana AI law in the broader regulatory landscape

Indiana's law does not exist in isolation. The trend across the United States is toward more regulation, not less: at least 20 states enacted or proposed AI-specific legislation in 2025 alone, and federal enforcement agencies — the FTC, EEOC, CFPB, and HHS — have all issued guidance making clear that existing laws apply to AI systems even where no AI-specific statute exists. Companies doing business across state lines must track each state's requirements independently — there is no federal preemption that would allow a company to satisfy Indiana's law and automatically comply with requirements in Illinois, Colorado, or New York.

The EU AI Act applies to any company serving EU customers, even if you're based in Indiana. Penalties reach €35M or 7% of global revenue. Deadline: August 2, 2026.