By Dan Coleman, general manager of federal civilian at Microsoft
As both industry and federal agencies look ahead to fiscal year 2026, artificial intelligence is no longer a future-state technology. It’s a present-day imperative. Agencies across government have already begun using AI to improve productivity, unlock insight from complex data and enhance services for citizens. But as the pace of innovation accelerates, strategic foresight is needed to turn experimentation into meaningful transformation.
Based on recent federal activity and emerging technology capabilities, here are five AI trends that government leaders should prioritize to ensure mission resilience, service delivery and operational efficiency in the year ahead.
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AI Assistants Will Mature and Multiply
AI assistants, also known as copilots or virtual helpers, are evolving into indispensable tools for federal employees. These systems integrate directly into daily workflows—summarizing meetings, surfacing relevant insights, suggesting next steps and even performing tasks like filling out forms or conducting research. The maturation of these assistants means they are becoming more context-aware, more responsive to user behavior and more accurate in their ability to reason over agency-specific data.
As they develop, these assistants will provide personalized support not just for leadership, but across the entire federal workforce, especially in environments where information overload can limit productivity. From accelerating onboarding for new hires to assisting analysts in data-rich environments, these tools will continue to improve how work gets done.
‘Build, Buy, or Extend’ Will Shape Agency AI Strategies
A major decision point for agencies today is whether to build custom AI applications, buy commercial off-the-shelf capabilities, or extend existing platforms with their own data and logic.
Building custom solutions offers tailored capabilities but often requires more time, talent and infrastructure. Buying ready-to-use software can help agencies adopt AI quickly and securely, but may not meet every mission need. A rising trend, however, is the “extend” approach: using pre-built AI platforms that allow agencies to integrate their own data, workflows and expertise.
This hybrid model strikes a balance between speed and customization. It enables agencies to focus on domain-specific value creation while leveraging the heavy lifting already done in foundational AI infrastructure.
Multimodal AI Will Enhance Interactions and Accessibility
AI tools are moving beyond text-based chat. Multimodal models can now “see,” “hear,” and “speak,” which will allow for more natural, accessible and dynamic interactions. These systems can process voice commands, interpret visual inputs and respond with lifelike speech or real-time visuals.
This capability opens new doors for government services. Imagine an applicant seeking information about benefits through a voice assistant that understands regional dialects and can display a visual step-by-step guide on a mobile device. Or a federal helpdesk agent who uses an AI tool that transcribes a conversation, summarizes key points and recommends actions in real-time, all in multiple languages.
Multimodal AI will play a central role in improving digital accessibility, meeting users where they are and enabling more inclusive, human-centered experiences.
Reasoning Models Will Power More Strategic Use Cases
Traditional generative AI tools are great for tasks like summarization or content generation, but reasoning models represent the next level of AI intelligence. These models are trained to solve multi-step problems. This will mirror how a human would plan, adapt and respond when faced with complex challenges.
In government, reasoning models can support mission-critical operations that involve strategy, logistics, science, or multi-agency coordination. They can help planners evaluate variables, assess risk and recommend courses of action. For example, a reasoning model could support emergency response by mapping out multiple response scenarios, assessing supply chain implications and helping prioritize actions based on available resources.
While these models are still emerging, their potential for supporting high-stakes government work is substantial, and federal agencies would benefit from early exploration and pilot programs.
AI Agents Will Operate Autonomously Within Guardrails
AI agents represent the shift from AI as an assistant to AI as an operator. These applications can initiate and complete tasks with minimal human intervention, from submitting tickets to updating systems to coordinating across digital workflows.
Designed correctly, AI agents can act independently to triage requests, resolve issues and even analyze compliance data. Their ability to reason, take initiative and learn from experience makes them uniquely valuable for automating repetitive or high-volume tasks.
However, trust and safety must remain central. While these agents can enhance efficiency, they must operate within well-defined policies and have human oversight, particularly when working with sensitive data or making impactful decisions.
A Strategic Moment for Federal Leaders
As government agencies continue to modernize, the five trends outlined above aren’t just about technology; they’re about building capability, resilience and public trust.
Heading into FY26, federal leaders have an opportunity to take a more intentional approach to AI adoption. This means asking:
- Where can AI drive the most mission value?
- How do we integrate AI into existing workflows securely and responsibly?
- What public-private partnerships can accelerate our AI journey?
- How do we ensure equitable and accessible AI experiences for all users?
By aligning these trends with strategic planning and agency goals, the federal government can lead the way in delivering smarter, more responsive services grounded in innovation and driven by purpose.
