Updated July 26, 2026. Quick answer: We tested AI search summaries against our own statute-verified data for all 51 US jurisdictions. On settled statutory questions the summaries were accurate — four of four, including two genuinely subtle ones. On tax bills that were introduced and then died, they were wrong three times out of five, each time reporting a failed bill as enacted law — and the three they got wrong were all bills that had advanced far enough to generate news coverage before dying. The failure is not general inaccuracy. It is specific, mechanical, and predictable.
The finding
A bill that passes generates a wave of coverage. A bill that dies generates silence. Summarizers inherit that asymmetry, so the errors cluster precisely on tax breaks that almost happened — the ones that got a round of “what this means for retirees” articles when they were introduced, and nothing at all when they were killed in committee.
This matters more than an ordinary factual slip, because the reader is a retiree who may plan around a deduction that does not exist.
Failed bills reported as law (3 of 5 wrong — see the correction below)
| Bill | Actual status (verbatim) | What the AI summary said | Observed |
|---|---|---|---|
| Alabama HB388 (2025) | Dead 05/14/2025 | Returned the $12,000 figure as current law on two separate queries, and on one produced a “$24,000 combined” figure for married couples — a number that appears in no version of the bill, passed or failed. | observed 2026-07-25, reproduced 2026-07-26 |
| Colorado SB25-136 | Postponed Indefinitely, 02/27/2025 | Stated “Current Status – ENACTED … The bill has been enacted and is now law,” and went on to describe a prospective 2026 removal of the pension caps as settled fact. | observed 2026-07-26 |
| Missouri HB 426 | Dead 05/16/2025 | Described the bill in the present tense as providing “a full 100% exemption for retirement allowances from privately funded sources beginning in tax year 2026,” with no indication it had died. | observed 2026-07-26 |
Alabama HB388 (2025)
What the record says: BillTrack50 bill detail 1854862 — status line reads verbatim “Dead 05/14/2025”. The law that actually applies: The Alabama age-65+ retirement-distribution exemption remains $6,000 per taxpayer (Lynn Greer Retirement Income Tax Cut Act, Act 2022-294; Ala. Code §40-18-19).
What the AI summary said (observed 2026-07-25, reproduced 2026-07-26): Returned the $12,000 figure as current law on two separate queries, and on one produced a “$24,000 combined” figure for married couples — a number that appears in no version of the bill, passed or failed.
Colorado SB25-136
What the record says: Colorado General Assembly, leg.colorado.gov/bills/sb25-136 — Senate Committee on State, Veterans & Military Affairs voted 3-2 to postpone the bill indefinitely. The law that actually applies: Colorado’s existing rules stand: age 65+ may subtract 100% of federally taxed Social Security; ages 55-64 may subtract 100% only if AGI is at or below $75,000 single / $95,000 joint. The pension/annuity caps were not removed.
What the AI summary said (observed 2026-07-26): Stated “Current Status – ENACTED … The bill has been enacted and is now law,” and went on to describe a prospective 2026 removal of the pension caps as settled fact.
Missouri HB 426
What the record says: BillTrack50 bill detail 1756255 — status “Dead” as of 05/16/2025. The law that actually applies: Missouri’s private-pension exemption remains subject to the pre-existing cap and income limits; the bill’s 100% exemption did not take effect.
What the AI summary said (observed 2026-07-26): Described the bill in the present tense as providing “a full 100% exemption for retirement allowances from privately funded sources beginning in tax year 2026,” with no indication it had died.
Control questions on settled law (4 of 4 correct)
These are reported in full because they are the reason the finding is narrow. A study that only published the failures would misrepresent the technology.
| Question | Statutory answer | Result |
|---|---|---|
| Oregon estate tax exemption amount for 2026 | $1,000,000 filing threshold, fixed and not indexed (ORS ch. 118) — the lowest in the nation. | Correct. Returned $1,000,000 and correctly noted it is not indexed for inflation. |
| Does Illinois tax 401(k) withdrawals in retirement? | No. Illinois subtracts all federally taxed retirement income — 401(k), 403(b), 457, traditional IRA distributions, and public and private pensions. | Correct. Stated Illinois does not tax 401(k) withdrawals and correctly listed the covered plan types. |
| Can New York’s $50,000 small-estate affidavit transfer a house? | No. The voluntary administration proceeding (SCPA Art. 13, §1301) covers personal property and expressly excludes real property. | Correct, and unusually precise — stated the affidavit cannot transfer real estate and that an estate containing solely owned real property must use full probate. |
| Is Illinois estate tax owed only on the amount above the $4,000,000 exclusion? | No. Illinois is a cliff: an estate over $4,000,000 is taxed on the full taxable estate, not the excess. | Correct. Described the cliff effect accurately, including that an estate of $4,000,001 is taxed from the first dollar. |
Correction and refinement, July 26, 2026
This page originally reported the failed-bill result as 3 of 3. It is 3 of 5. After publishing we tested two further failed bills drawn from our own dataset, and the summaries got both of them right:
| Bill | Actual status | What the AI summary said |
|---|---|---|
| Rhode Island H5761 | Introduced 02/26/2025, referred to House Finance; not enacted | Correct. “This is still a proposal and not law yet.” |
| New York S2571 / A259 | Referred to committee; not enacted as of mid-2026 | Correct. Stated the results do not indicate the bill has been enacted. |
That correction makes the finding sharper, not weaker. Look at which bills the summaries got wrong and which they got right:
- Wrong (3): Alabama HB388 passed a chamber 103-0. Colorado SB25-136 drew a fiscal note and advocacy coverage. Missouri HB 426 advanced similarly. Each generated a wave of “what this means for retirees” coverage on the way up — and then died quietly.
- Right (2): Rhode Island H5761 and New York S2571 were referred to committee and sat there. No wave, no fanfare, no death notice needed.
So the error does not track whether a bill died. It tracks how much coverage the bill generated before it died. A bill that advances far enough to make headlines creates a durable body of text describing a benefit in the future tense; its quiet death in the other chamber creates almost none. The summarizer inherits that imbalance. Bills that never got the coverage wave never acquire the false-positive risk in the first place.
This is a more useful warning than the original one: the tax changes most likely to be reported to you as real are precisely the ones that came closest to passing.
Method, and its limits
- Ground truth comes from our published, statute-cited 51-jurisdiction datasets, and every bill status was re-fetched on 2026-07-26 from the legislature’s own site or from BillTrack50 and is quoted verbatim above.
- Surface tested: a major search engine’s AI-generated result summary. We did not separately test ChatGPT, Gemini, Perplexity or Copilot, and we make no claim about them.
- Sample size is small — seven questions, three of them failed-bill cases. This is a documented, reproducible pattern, not a measured error rate. We do not publish a percentage, because seven questions cannot support one.
- Queries were ordinary consumer phrasings, not adversarial prompts engineered to induce failure.
- Where a summary was correct we say so plainly, including where it was more precise than we expected.
Reproduce it yourself in about five minutes
- Open the Colorado General Assembly’s page for SB25-136 and read “Postponed Indefinitely.”
- Search a major engine for the bill’s status and read the AI summary.
- Repeat with Alabama HB388 (“Dead 05/14/2025”) and Missouri HB 426 (“Dead” 05/16/2025).
- Then run a settled-law question — Oregon’s estate tax exemption, say — and watch it come back correct.
The contrast is the finding.
The underlying data
The ground truth is free to check and free to cite: retirement taxes by state, estate tax by state, probate cost by state, and the machine-readable datasets. Our running list of what changed for 2026 versus what was merely reported as changing is at state tax changes 2026.
Corrections
If any row here is wrong we want to know and we will correct it in public — see our corrections policy. Journalists and researchers may request the full query log with timestamps.
Cite or share this study: “AI Search and Failed Tax Legislation: A Statute-Verified Audit (2026),” Clear Money Guide; clearmoneyguide.com/ai-tax-advice-audit-2026/. Free to cite with attribution.