How Will States Respond to Policy Actions Taken by the New Administration?
All 50 state legislatures convene in 2025, including biennial legislatures. Notably, while last November’s general election saw Republicans outperform Democrats in the presidential race and other critical national contests, those results did not impact down-ballot elections—particularly those in state legislatures—as significantly as past cycles would have suggested.
In fact, while a few chambers across the country experienced a switch in party control, in aggregate both the GOP and Democrats largely maintained the status quo on key metrics such as seat percentage and overall balance of state control.
Republicans’ victories at the national level, as evidenced by President Donald Trump’s inaugural address and initial executive orders, will undoubtedly create a dynamic and complex relationship with state governments.
GOP-led legislatures will obviously be more likely to adopt, mirror or buttress their party’s policy priorities at the federal level. Conversely, many blue states have already begun to position themselves as alternatives—or even steadfast opponents—to Republicans’ federal initiatives, with California, New York and Illinois as prime examples. Expect to see some divergence in Democratically controlled states in responding to certain Trump orders.
A slew of lawsuits from Democratic states and civil rights groups challenging Trump’s executive order attempting to end birthright citizenship is an early view of what resistance may look like in the coming months. So far, 22 Democratic state attorneys general along with the District of Columbia and the City of San Francisco have filed lawsuits challenging the birthright citizenship order in federal courts.
States may also look to inoculate their laws from certain Trump administration policies through legislation and executive actions. Shortly after November’s election, Gov. Gavin Newsom (D) called for a special session to “defend California values” and “Trump-proof” the state to the extent possible on issues such as civil rights, immigration, climate policy and reproductive freedom, among others. Meanwhile, National Governors Association Chair and Colorado Gov. Jared Polis (D) has recently signaled a more collaborative approach as many Democratic governors will have to carefully choose which battles they really want to fight in the early days of the Trump administration.
While the full extent of that complex state-versus-federal dynamic remains to be seen, we expect legislators to tackle a host of far-ranging policy issues ranging from inflation, affordability and the economy to artificial intelligence (AI) and technology to energy and the environment—and any number of topics in between.
Here are common policy issues we expect state legislators to address in their respective 2025 sessions.
Economy
The status of the economy was arguably the predominant issue during the most recent election cycle and, unsurprisingly, it remains at the fore of policy agendas nationwide, particularly inflation and associated impacts on consumer affordability. Trump issued an executive order directing all of the federal departments and agencies to deliver emergency price relief. Yet, with so much of the national conversation focused on domestic versus international manufacturing and tariffs, voters will still look to elected officials at the state level for ways to reduce costs for essential goods and services. These issues have been front and center in every inaugural and state of the state address from governors of both parties over the last two weeks.
For example, in California, Democrats have signaled that they plan to address housing and fuel affordability to help wrangle the cost of living. Concepts range from streamlining the production of more residential unit supply through building code and land use reform to allowing for a higher percentage of ethanol blends in gasoline. Additionally, a host of Democratically controlled states have indicated that they will pursue further enforcement tools and penalties against alleged price-gouging.
Meanwhile, tax reform and cuts to alleviate pressures on consumers are a recurring policy theme emanating from Republican-controlled states. Interestingly, while GOP policymakers continue to discuss lowering income tax rates, there has been a groundswell of policy proposals to address property taxes as well. For example, Texas—a state that constitutionally prohibits the collection of income tax and therefore relies on other tax streams like property tax—passed an $18 billion property tax cut in its most recent legislative session. Now, certain lawmakers have contended that further reductions are required, with some going as far to say property taxes should be eliminated entirely. Similarly, Florida passed a $1.07 billion tax relief package in its last lawmaking period, which included a one-year exemption from a 1.75% tax on home and flood insurance premiums. However, it is important to note that Republican-led states are not entirely a monolith regarding tax reform. Notably, in Colorado—where Democrats have a trifecta in the governor’s office, the state House and state Senate—efforts to reduce both income and property taxes have been a shared goal of both Republicans in the legislature and Gov. Polis, occasionally to the chagrin of Democratic legislators.
It will be interesting to see how federal-level action to decrease bureaucracy and reduce regulation, including recommendations by the newly created Department of Government Efficiency (DOGE)—led by Trump confidants Elon Musk and Vivek Ramaswamy—might spur states to reevaluate where they could cut regulatory red tape or might take on due to political pressures. Interestingly, despite being among the first Democratic governors to proclaim Colorado’s sovereignty against unwanted incursions by President Trump, Gov. Jared Polis announced only a few weeks later that he was rescinding 208 executive orders and would work with the state’s business community on further regulatory reforms to decrease the administrative burden levied by state government.
Workforce Recruitment and Retention
Workforce and employment issues that have until recently been patched up with American Rescue Plan Act (ARPA) funds are likely to need a fresh bandage. These solutions, while unique at the state level, are similar regardless of party. So, what are states with different political thinking doing to increase recruitment and boost retention? The answer is everything that they can, borrowing plans from other states and making them their own.
For example, South Dakota and New York are looking to recruit or re-employ freshly retired or longer retired residents who wish to return to the workforce, whether for financial means or for social or emotional reasons. States are likely to bring forward legislation that would allow certain professionals to return to the market while allowing their pension benefits to stay active. The goal here would be to allow retirees to help address workforce shortages and fill essential gaps in the workplace.
States are looking at strategies such as removing formal degree requirements from job postings and are moving towards a skills-based hiring method that will put more emphasis on previous job training and experience. A shift to short-term and nondegree credentials like certifications, micro-credentials, licenses and apprenticeships might be where policymakers start. This method could lead to pathways for individuals without a traditional career trajectory. States may also encourage employers to expand their hiring efforts by offering more remote and hybrid roles that would allow them to reach a wider talent pool geographically.
With workforce development funds under the federal American Rescue Plan largely expended, states will have to look for other strategies in seeking funds for workforce recruitment and retention. Those strategies could include looking for other federal grants, private partnerships and other revenue sources such as tax increases. However, lawmakers may not be eager to raise taxes in the current economic climate regardless of party.
Other options for states to incentivize recruiting and retaining employees include student loan repayment programs. In Massachusetts, a potential participant is eligible for repayment aid if they work a minimum of 35 hours per week as a human services worker and maintain 12 consecutive months of employment in that role. In Missouri, one current piece of legislation would amend existing law to allow for a loan repayment program for persons who graduate from an accredited training program for a wide range of health professions.
For teachers, states like Indiana and Colorado both have introduced legislation that would provide tax credits for schools to help offset personal expenses for educational materials. Another bill from Oklahoma would provide tuition and mandatory fee assistance to individuals to earn a bachelor’s degree from an accredited teacher preparation program if an individual commits to teach in a public school for each academic year that the individual received assistance in one of the critical shortage subject areas identified by the State Department of Education.
Key legislation in many states also tackles pay equity and fair employment practices. Prioritizing employee well-being and mental health is a factor many states are considering to bolster employee recruitment and retention. Many states are considering bills to create a diverse platform for training and certification, including to help workers avoid unsafe working conditions or to foster inclusivity, like a New York proposal for an optional neurodiversity training program. Additionally, New York and Arkansas have introduced legislation that would create an income tax credit for employers who assist employees with child care costs.
Labor and Worker Protections
The influence of state-level labor stakeholders will also likely be tested in upcoming sessions, with unions and other labor-entities in blue states seeking to shore up worker protections proactively or in response to initiatives undertaken by the Trump administration. One example championed by labor organizations are requirements for employers to provide predictive scheduling to their employees through state legislation, which often include the following provisions:
- Mandate employers to provide work schedules for a period of time (in some cases, 14 days) in advance.
- Require posting schedules in a visible location.
- Require employers to provide new hires with a good-faith estimate of expected work hours.
- Mandate predictable pay for changes to schedules within a notice period that may result in additional compensation.
- Require rest periods between shifts.
- Permit to refuse schedule changes after the initial notice period.
Additionally, legislation across the country on the topics of increased benefits, employee classification and captive audience meetings are likely to make a return in some states while others tackle these topics for the first time.
Texas and Maine are two states with a full slate of bills this year that would expand flexible work arrangements and flexibility under Family and Medical Leave Act (FMLA) benefits. These expansions include the birth, adoption, loss and for the care of a family member. In some cases, this would not require an employee to use sick or personal time.
States are also working on numerous bills that relate to collective bargaining agreements. In the state of New Hampshire, legislation has been introduced that would prohibit collective bargaining agreements from requiring employees to join or contribute to a labor union. In the state of Washington, legislation would look to prohibit an employer or any other person from directly or indirectly interfering with, restraining, coercing or discriminating against any cannabis employees or group of employees from their right to organize and designate a bargaining representative. And Colorado legislators, at odds with the governor, are looking to repeal the state’s Labor Peace Act and become a union shop state.
Climate, Energy, Environment and Transportation
Given Trump’s first set of executive orders, states can expect stark shifts in energy and climate policy from his administration, including a federal funding rollback for climate change abatement and other environmental policies.
As President Trump has already declared an energy emergency under the National Emergencies Act, Republican- and Democratic-led states will likely uphold the status quo in their differing approaches to energy policy. Red states will likely focus on expanding oil, gas and coal operations. While red states have resisted federal renewable energy mandates under the Biden administration, the Trump administration and a Republican-led Congress will likely encourage fossil fuel expansion. Pipeline infrastructure is also expected to be a focus in red states, along with efforts to reduce any existing clean energy subsidies.
In contrast, blue states are expected to fight vigorously against any rollbacks of renewable energy initiatives by the federal government. States like California, Washington and Illinois have already pledged to protect initiatives aimed at expanding solar and wind energy, continuing carbon pricing practices and reducing state emissions to eventual net-zero. They may also continue efforts to improve energy equity, especially for low-income communities.
There may be some common ground. Red and blue states may follow a similar path in advancing nuclear energy. Last year, the Biden administration announced their “Investing in America” agenda, which allocated $900 million to states for the upkeep or reinstitution of existing plants. The distribution of these funds may enable red and blue states to work together to diversify their energy portfolios by expanding nuclear energy centers.
On the environment and climate, President Trump has also already pulled out of the Paris climate agreement and ended the Green New Deal, ordering agencies to halve funds appropriated through the IRA and another law on infrastructure and jobs. The IRA was the most sweeping piece of climate mitigation legislation ever passed in the United States. Tax credits for clean energy investments could reach $1.2 trillion over 10 years, if the law were not significantly altered. The IRA also has funding for grants and loans for clean energy businesses. More IRA benefits had been filtering to Republican districts than Democratic ones, and the law was credited with spurring significant job creation. President Trump, however, blamed the IRA for high inflation.
One of the Republican goals in the coming year will thus be cutting clean energy spending programs. The onus of supporting industries reliant on policies like tax credits will fall to the states, should they choose to do so. Industries that could be impacted by this are renewable energy, clean energy technology, manufacturing and transportation. For example, Trump also issued an executive order that ended former President Biden’s electric vehicle targets, which had stipulated that electric vehicles make up 50% of new cars by 2030. As more states introduce legislation this year, EV adoption and charging technology will likely be on the agenda, particularly for Democratic lawmakers. Already, state governments have signaled that they may replace it on the state level, as California has indicated it will try to do.
As far as climate policy, the U.S. Supreme Court’s recent overturning of the Chevron deference will also affect how both regulation and deregulation will proceed from here at the state level. Just as the end of this precedent will make it more difficult for agencies to create regulations not included in legislation, it will also make it more difficult for President Trump to instruct agencies to undo previously instated regulations. As regulation and deregulation at the federal level will be more reliant on Congress, the states will have greater latitude to address regulatory priorities than before. Nonetheless, states with stricter environmental regulations are expected to codify them to defend them from challenges by the Trump administration. Late last year, California Gov. Newsom called a special legislative session to specifically prepare for anticipated legal battles with the new administration, including many of the state’s environmental and climate policies
California’s legal and political preparation in defiance of President Trump is a prime example of how climate policy could fall into a tug-of-war between states and the federal government. Other states are likely to embrace regulatory cuts. In West Virginia, for instance, the Nov. 5 attorney general and governor races featured promises of untangling the web of federal regulations from the local economy. President Trump has also attempted to condition federal disaster aid on political cooperation in the past, and every indication points to his administration continuing to use such pressure tactics. This only puts more pressure on legislators in the states to balance competing priorities as regulatory responsibility falls largely to the state level as climate-related disasters are reportedly on the rise.
Finally, both red and blue states are expected to tackle transportation and infrastructure issues this session. A problem on both sides of the aisle is the rise in popularity of electric vehicles, which subsequently decreases the tax revenue from fuel sales. States like Georgia, Kentucky and Washington were forced to allocate one-time funding to transportation departments during the last session because of this decrease in revenue. Several states have already implemented electric vehicle fees, due at the time of registration, to supplement the loss in fuel revenue, a move that other states are expected to make. Others have sought to institute additional fees for public EV charging stations.
Both red and blue states may also implement new toll roads or increase existing pricing to compensate for the loss in fuel revenue. Red states may also focus on improving road quality or prioritizing allocations of tax revenue for this purpose.
Where red and blue states may diverge on EVs is on subsidies. Blue states like Maine and Massachusetts are expected to maintain their rebate levels for EV purchases, ranging anywhere between $500–$15,000. Conversely, while red states have been hesitant to offer incentives for EV purchases in previous sessions, the presence of Tesla CEO Elon Musk in the Trump administration may change this thinking. Republican states may explore tactics such as tax credits, like Mississippi, or offer other benefits such as allowing EVs in HOV (high-occupancy vehicle) lanes regardless of the number of passengers. If the Trump administration were to implement incentives for EV purchases at the federal level, it is likely that red states will expand on their own incentives.
Artificial Intelligence and Technology
Since the 2022 midterm elections, the landscape of technology policy has changed drastically. Artificial intelligence (AI) has exploded in the U.S. economy all the way down to individuals’ daily lives. OpenAI’s release of ChatGPT in 2023 saw rapid growth in and excitement around the use of generative AI tools. McKinsey reports that about two thirds of its global organizational survey respondents used generative AI in their business functions in 2024. Expect AI regulation to be top of mind for many politicians given the technology’s quick deployment since its introduction.
The technology sector will continue to contend with states as they shape their ESG policies, especially related to AI. There are concerns about AI models being trained on data that include inherent racial, class, sex or other types of bias. State governments have begun taking steps such as mandating developer disclosures about risks and prohibiting certain uses of AI technology to address this. With an increase in AI use, it is possible that states will likely look to regulate AI-powered recruitment tools to better screen résumés and for identifying top candidates.
States are also grappling with how AI affects various aspects of government, economy and civil society. Some states, such as Colorado, have already begun to create regulations around high-risk AI systems to protect consumers against algorithmic bias in those systems. This will likely continue across states, especially those with tight and expensive housing markets to prevent AI algorithms from discriminatorily raising rents or evaluating rental applications. Other consumer protections are beginning to appear in states across party lines, too, such as rules against the use of AI in creating harmful images or using peoples’ likenesses. Other attention will go to the use of AI in education and health care settings. The risks of AI are seen touching issues such as privacy, free speech, intellectual property and discrimination, and discussions around these topics are sure to continue throughout 2025.
Because AI is being applied so broadly across industries, state actions to bolster or control the technology will vary. In addition to the perceived risks of AI, the politics of AI and jobs is another critical area. On one side, AI is predicted to replace many human jobs, especially through automation of certain tasks and services. On the other hand, investments in AI could create new jobs in specialized roles. States like Michigan, with historical reliance on manufacturing jobs, are preparing for job displacement into different industries and roles.
In California, the politics of AI policy are especially nuanced. California’s budget deficit is expected to be smaller this year than in past years but is projected to grow larger again in the coming years. For a state whose budget is so intrinsically tied to the health and success of the technology industry, supporting the growth of AI is likely favorable for California legislators. And yet, California also seeks to be a Democratic stronghold against President Trump’s conservative efforts. Leaders like Gov. Newsom will have to toe a line between stoking economic growth and regulating big corporations in the technology sector.
The rapid evolution of AI technologies will mean that state officials will have to remain agile in addressing them. In addition to AI, states will likely look to take action on cybersecurity and data privacy more broadly.
Immigration
Immigration and border security were the only issues that were more important to voters than the economy. Immigration was also a hot issue in many state-level executive and legislative races. Even in non-border states such as Missouri and North Carolina, GOP gubernatorial candidates campaigned on border security and anti-illegal immigration policies. Republicans will continue to push back on Biden’s border policies nationally, though a slim House majority and intraparty divides may also present a challenge to immigration policy changes.
Trump’s executive orders on border security and immigration and subsequent pronouncements on enforcement mechanisms will have dramatic ripple effects for states. The freshly inaugurated president laid out an aggressive plan to secure the border, advance deportation operations and protect American communities. Many of these policies are likely to see legal challenges from Democratic attorneys general and cities in the coming months.
State by state, immigration policy in 2025 could look radically different. States like California, Illinois, New Mexico and Arizona are already preparing legal challenges to President Trump’s immigration policies. City governments, too, such as Los Angeles and Denver, have pledged to resist mass deportation efforts. Los Angeles recently codified its “sanctuary” city laws and Denver Mayor Mike Johnston threatened to use local law enforcement to block federal immigration authorities from entering the county, though he subsequently backtracked these comments. Meanwhile, Trump has threatened to cut off funding to sanctuary cities.
Other states have moved to align themselves with the new administration. Information-sharing and collaboration with federal enforcement agencies will be a large focus for state lawmakers. For example, states aligned with the Trump administration’s immigration strategies may seek to utilize provisions of the Laken Riley Act, which was just passed by Congress with bipartisan support. In addition to expanding the powers of local law enforcement, the bill’s primary focus makes it easier for local law enforcement to work with the federal government to enforce immigration laws. In New Hampshire, there is also prefiled legislation intended to increase surveillance and introduce increased burdens for illegal immigrants, including invalidating out-of-state driver’s licenses, requiring public university and community college students to pass naturalization examinations, requiring public grade schools to collect and report immigration data and increasing cooperation with federal immigration authorities. Meanwhile, Republican legislators in California have begun filing border law reforms while their Democratic counterparts are filing protections for immigrants. Across states, party-line immigration legislation is expected to continue.
And yet, despite political polarization on immigration enforcement, economic implications may further complicate policymaking. Texas’s Operation Lone Star is likely to serve as a model for the Trump administration on how to approach border policy. This operation, which began in 2021, is an enforcement effort that authorized the National Guard and state and local law enforcement to patrol the borders with greater latitude to carry out arrests. Since its beginning, Operation Lone Star has cost the state $11 billion, and Gov. Greg Abbott has already asked the Texas legislature for $2.88 billion more even before it reconvened last week. As the only fully Republican-controlled state on the U.S.-Mexico border, Texas will likely be key to national immigration policy enforcement efforts, and it has already promised land for federal facilities. However, given the cost of Operation Lone Star, there will likely be some friction in the state legislature. Some Texas legislators are expecting to pull back funding while Gov. Abbott has promised to ramp it up. Texas’s growing construction, agriculture and service industries are heavily reliant on undocumented labor, so conflict is likely for these political and policy priorities in the coming year.
States less compliant than Texas will face pressure from the federal government, such as withholding funding and attempts to use military and local law enforcement. Tom Homan, President Trump’s incoming “border czar,” has threatened to jail officials for potential resistance. Homan has also guaranteed that federal funding will be withheld from noncompliant jurisdictions. Currently, Oregon and Illinois have the most protective laws favoring immigrants, but other states may move to codify similar protections in the coming sessions.
Health Care
The coming year will see trends in health care policy divided into a number of groups. First, there are federal regulatory trends where states will have little influence. These include changes at Health and Human Services (HHS), including Food and Drug Administration (FDA) regulatory practices and drug pricing. Second, there will be policy discussions that involve cooperation or negotiation between states and the federal government, such as Medicaid coverage and a potential Affordable Care Act (ACA) replacement. Finally, there are a number of issues that we can expect to be left to state discretion. So far, these last issues will include abortion and gender-affirming care. President Trump’s nomination of Mehmet Oz and Robert F. Kennedy, Jr. to key health agency positions in his administration indicates that health care policy could undergo sweeping changes in the coming years, at least at the federal level. However, President Trump and Vice President JD Vance have indicated their preference to leave the issue of abortion to the states. In the coming year, we can expect state legislatures to continue to grapple with issues related to health care access.
While states will have little latitude to control policy influenced by action regarding the FDA or similar national regulatory changes, they will have to work directly with the federal government, particularly around Medicaid coverage. President Trump has vowed to repeal and replace the Affordable Care Act in his next term. State governments will be anxious to see how their rights and responsibilities will change under a different health care law. Ten states have not expanded Medicaid as the ACA allowed and have thus rejected the federal funds available to them through the act. Those states are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin and Wyoming. Similarly, nine states have trigger policies that would remove expanded Medicaid coverage under the ACA immediately if it is repealed and federal funding drops below a certain level. Those states with trigger laws are Arizona, Arkansas, Illinois, Indiana, Montana, New Hampshire, North Carolina, Utah and Virginia. Michigan formerly had a similar trigger law, then the governorship changed party and the law was undone. In Montana, one of the states with a funding trigger, lawmakers must reauthorize Medicaid expansion that will otherwise expire anyways in 2025, regardless of changes to national policy. States are likely to follow party lines when it comes to repealing previous Medicaid expansion.
Democratic lawmakers in Texas, Missouri and Tennessee have filed legislation that would expand instances of Medicaid coverage, such as for expansion of coverage for sickle cell disease and for all those for whom federal matching funds are available. Florida is battling Medicaid coverage from a different angle, by disputing a rule previously made by the Centers for Medicare and Medicaid Services (CMS) in March 2024. This rule concerns whether children can remain covered by KidCare despite unpaid premiums by their families. Florida’s executive office is also urging CMS to delay new rules until the new administration takes over. Whether or not—but especially if—the ACA is repealed, state legislatures are expected to continue to battle over Medicaid coverage and funding in the coming year.
Since the overturning of Roe v. Wade in 2022, abortion has been an issue top of mind in the healthcare space. Many Republican-controlled states swiftly moved to put restrictions on abortion access soon after the U.S. Supreme Court overturned the ruling. Abortion is banned in almost all circumstances in Alabama, Arkansas, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Oklahoma, South Dakota, Tennessee, Texas and West Virginia. States with gestational limits stricter than the viability standard in Roe v. Wade include Florida, Georgia, Iowa, South Carolina, Nebraska, North Carolina and Utah. Over half of these states ban abortion after six weeks, which entails a near-total ban based on when most women find out they are pregnant. Montana, Missouri, Colorado, Maryland, New York and Arizona voters enshrined abortion protections in their state’s constitution or bill of rights in 2024 elections, though similar measures failed in Florida, Nebraska and South Carolina. Wyoming, which is Republican-controlled, has court-issued blocks on abortion bans. Some states may attempt to place stricter laws on the procedure in 2025, such as North Dakota and Utah, where legal battles are underway on new restrictions. In states with bans, more restrictions could become law. For example, in Texas, filed legislation adds new regulation to the access to abortion-inducing drugs. States without bans may take similar action, such as in New Hampshire, where filed legislation would provide criminal and civil penalties for assisting a minor with accessing an abortion. In all states without constitutional abortion protections, Democratic lawmakers are expected to attempt to add them through legislation, and in states with abortion protections, they will attempt to expand them for people traveling between states or assisting others. While new bans are unlikely, abortion will continue to be a focus for legislatures in all 50 states.
Other health care topics that are likely to receive attention in 2025 are gender-affirming care (especially for minors) medical cannabis programs and access to reproductive services such as in-vitro fertilization and contraception.
This document is intended to provide you with general information regarding state policy issues under a new federal administration. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed