DHS has published a Notice of Proposed Rulemaking that would add a new $103,265 fee to H-1B cap-subject petitions starting in 2027, including those filed under the U.S. master’s degree exemption. The rule will be formally published in the Federal Register on August 25, 2026, and written comments are due by September 24, 2026.
It is important to note that this is only a proposal. It will take months, if not longer, before the proposal can be published in final form. Litigation is inevitable.
Employers should not change current hiring plans or overall staffing strategies based on this proposal. We strongly encourage interested companies and individuals to submit comments to the notice explaining why the policy will negatively impact US businesses, or their specific businesses.
What the Proposed Rule Does
- Adds a new $103,265 fee for all H-1B cap-subject petitions, including those eligible for the advanced degree exemption, payable at the time of filing. It does not impact petitions already filed. The fee would apply to all petitions, whether or not the individual is inside the US.
- Does not apply to cap-exempt H-1B petitions — such as petitions filed by institutions of higher education, nonprofit or government research organizations.
- Stacks on top of existing fees, rather than replacing or folding into the current H-1B petition fee structure.
What Employers Need to Know
- Only new cap-subject filings may be subject to the fee. Based on the existing cap-exemption framework this proposal relies upon, the fee does not appear to extend to extensions of stay or change of employer petitions for workers already counted against the cap within their initial six-year period of admission, although this is not expressly stated by DHS in the proposed rule.
- No exemption for small and mid-size petitioners. DHS estimates a significant economic impact on over 11,000 small entities that file H-1B cap-subject petitions.
- Stakeholder comments are important. DHS must respond to substantive comments before finalizing the rule, and a well-reasoned and documented comment can build a record for future legal challenges.
Background
DHS has historically set USCIS fees to recover the cost of USCIS’s own adjudication and naturalization services. This proposed rule is a departure from that practice: DHS is proposing to use H-1B cap-subject petition fees to fund not just USCIS, but also ICE, CBP, DOJ’s Executive Office for Immigration Review, the State Department, and the Department of Labor. DHS calculated the fee by dividing roughly $8.8 billion in projected interagency costs by an assumed 85,000 annual cap-subject filings.
This is a separate proposal from the $100,000 fee imposed on certain H-1B petitions, which remains in litigation after a federal district court vacated the agency guidance implementing it. DHS notes in the preamble to the proposed rule that if both were ever in effect at the same time, employers would owe both amounts.
Meltzer Hellrung Perspective
If the rule is issued in final form without change, it will be subject to litigation on several substantive and procedural grounds. A few likely arguments:
- Statutory authority. DHS’s statutory fee-setting power is tied to the cost of the adjudication services USCIS provides. More than half the fee revenue in the proposed rule would fund agencies with no role in adjudicating H-1B petitions.
- Fee versus tax. DHS states one purpose of the fee is to make employers less likely to hire H-1B workers rather than qualified U.S. workers. A payment expressly designed to shape hiring behavior and fund unrelated federal programs looks less like a service fee tied to cost recovery and more like a tax, which requires congressional authorization.
- Agency deference. An $8.8 billion annual mechanism for funding six federal agencies is a substantial enough shift that courts may expect clearer congressional authorization than the general “full cost recovery” language DHS is relying upon.
Meltzer Hellrung will continue tracking this rulemaking through the comment period and will provide updates as DHS moves toward a final rule. If you have questions about how this proposal could affect your FY 2027 cap strategy, or if you are interested in submitting a comment to the proposal, please contact your Meltzer Hellrung professional.
