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As State and Local Government Enters the AI Era, New Research Charts the Path to 90%+ Adoption of Digital Services
[September 03, 2026]

As State and Local Government Enters the AI Era, New Research Charts the Path to 90%+ Adoption of Digital Services


State and local government leaders can boost digital service adoption and operating efficiency more than they realize. New research from PayIt finds that adoption rates exceeding 90% are within reach for organizations that prioritize the user experience, promote digital services, and put AI to work to expand the number of services offered online.

The 2026 Consumer Digital Government Adoption Index presents the findings from a survey of 1,038 U.S. residents about their experiences with digital government services and artificial intelligence (AI) in public service delivery. The findings provide insight into what holds residents back from digital channels, and provide a clear path to significant gains in adoption.

The consumer findings complement PayIt's 2026 Government Payments Experience Index, published in March, in which 609 state and local IT and line-of-business leaders reported an average digital adoption rate of 49.5% and said they're targeting close to 14 percentage points of growth.

"Public-sector leaders know that residents prefer to self-serve online, and they have seen the positive impac it has on their operations and staff satisfaction," said Kelly Davis-Felner, chief marketing officer at PayIt. "In this year's report, we took a close look at the barriers that hold residents back, and recommend a straightforward set of steps government agencies can take to maximize digital use."

The report's findings provide a roadmap to broader adoption:

  • Only 1 in 14 residents truly prefer analog channels. While 78.5% of respondents had completed an online transaction in the last 18 months, a meaningful proportion of the remaining holdouts are ready to use or willing to consider digital services, adding 14.2 percentage points and putting the addressable ceiling at 92.7%.
  • More than one-third of respondents reported they had to abandon the digital channel midstream. More than half of these residents reported poor usability as the primary reason why they had to abandon an online channel and revert to phone, mail, or in-person channels. Eligibility barriers accounted for an additional 29% of abandonment, marking an opportunity for government leaders to re-examine the constraints they set on digital services.
  • In the attention economy, promotion is essential. Leaders should make sure that residents can easily discover and locate their digital services. Asked how they found a digital government service, respondents cited an average of 1.76 channels, led by internet search, bill notifications, and agency websites. But online discovery is changing: search from AI platforms such as ChatGPT, Perplexity, or Claude is already among the top three channels for Gen Z.
  • AI has created new opportunities for digitization. AI technology has created a significant opportunity for public-sector leaders to digitize new services once thought too complex or sensitive for online channels. Residents are supportive of using AI to find answers, complete transactions, and resolve support requests. Among those who have already encountered an AI-powered government service, only 14% described the experience as poor or very poor.
  • But AI-powered government services warrant a thoughtful approach. Residents overwhelmingly agree that labeling is a must, with nearly 87% of our respondents stating that agencies should always disclose the use of AI in service delivery - up eight percentage points from the prior year.

Taken together, PayIt's research among public-sector leaders and the residents they serve makes it clear: agencies and residents agree that more transactions belong online, and the tools to get there - better user experience, multi-channel promotion, and AI-enabled service expansion - are already available.


Explore the full findings in the 2026 Consumer Digital Government Adoption Index.

About PayIt

PayIt enables state and local government agencies to deliver a great resident payments experience that accelerates the shift to digital. Agencies choose PayIt to better achieve their mission through improved operational efficiency, customer support, and resident satisfaction. Our solutions span property tax, courts, utilities, DMV, outdoors, and more. PayIt provides a single resident profile across agencies and jurisdictions, integrates into back-office and adjacent systems, and our team helps clients drive adoption of digital channels. Serving more than 150 million residents in North America, we have received awards from Fast Company and StateScoop, and have been listed in the GovTech 100 every year since 2015.

PayIt: Smarter for government. Easier for everyone.


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