A bill to amend the Internal Revenue Code of 1986 to impose an excise tax on systemically important AI activity, and for other purposes.

119th Congress Introduced by Bernie Sanders

The bill imposes an excise tax on AI activity deemed “systemically important,” outlining who pays, how the base is calculated, and how it’s administered.

Introduced in Senate

Summary of Bill: S. 4825 (119th Congress) — Excise Tax on Systemically Important AI Activity

Purpose and intent

The bill seeks to amend the Internal Revenue Code of 1986 to impose an excise tax on certain activity related to what it terms “systemically important AI activity.”

The stated aim is to raise revenue and/or deter risk associated with AI activities deemed to have broad financial or societal impact, by applying targeted taxation.

Key provisions and changes

Imposition of excise tax: Establishes a new excise tax on specified AI activity that is characterized as “systemically important.” The exact definitions of qualifying activity and what constitutes “systemically important” AI would be provided in the statutory text and administrative regulations.

Tax rate and base: Sets forth the rate or rates applicable to taxable AI activity and defines the tax base (e.g., gross receipts, value, or a defined measure of AI-related output or usage). The bill would specify how the base is calculated and any exemptions or allowances.

** liable entities**: Identifies who must pay the tax (likely developers, providers, operators, or users of AI systems) and whether there are attribution rules for joint or affiliated entities.

Deductions and credits: May include allowable deductions, credits, or exemptions (for research and development, small businesses, or other policy goals) and any special treatment for international activities.

Administration and compliance: Outlines how the tax is administered (IRS responsibility, reporting requirements, filing timelines), including potential penalties for noncompliance, interest, and methods of enforcement.

Effective date and transition: Specifies when the tax would take effect (e.g., a future calendar year) and any transitional rules for existing contracts or ongoing AI deployments.

Affected parties and potential impacts

AI developers and providers: Firms involved in creating, deploying, or monetizing AI systems that meet the “systemically important” criteria would be directly subject to the excise tax.

Users and customers: Depending on how the tax is structured, there could be downstream effects on pricing of AI services and products.

Investors and markets: Tax implications could influence funding, valuation, and profitability of AI-related companies.

Public sector and revenue: The government would gain new revenue, with proceeds potentially earmarked for public programs or deficit reduction, depending on final allocations.

Procedural and timeline aspects

Introduction and referral: Introduced in the Senate and referred to the Committee on Finance on June 18, 2026.

Sponsors: Co-sponsored by Senator Bernie Sanders.

Next steps: The Finance Committee would typically review, draft amendments, and possibly hold hearings before advancing to floor consideration. Timelines would depend on committee activity and legislative priorities.

Notes and considerations

The bill’s effectiveness and impact depend on precise definitions of “systemically important AI activity,” the tax rate/base, and how exemptions are structured.

As a new excise tax, implications for innovation, international competitiveness, and AI adoption would be debated, particularly regarding regulatory complexity and potential leakage to non-U.S. markets.

Without the full text, specific dollar amounts, percentages, and administrative procedures remain speculative. Reading the bill’s statutory language and any summaries released by the sponsor or committee will provide definitive details.