DHS Proposes New $103,265 H-1B Fee For Cap-Subject Petitions

On August 25, 2026, the Department of Homeland Security (DHS) is scheduled to publish a proposed rule in the Federal Register that would impose a new $103,265 H-1B fee on every H-1B cap-subject petition. This is a separate and, at this stage, entirely distinct development from the $100,000 fee imposed under Presidential Proclamation 10973, which we addressed in our earlier alerts, Presidential Proclamation on New $100,000 H-1B Fee and August 2026: $100,000 H-1B Fee Blocked Again.

Employers who sponsor H-1B workers should understand that this proposed $103,265 H-1B fee, if adopted, would apply in addition to all other required USCIS filing fees, regardless of how the litigation over the proclamation-based fee is ultimately resolved. Because this is only a proposed rule, DHS has not set an effective date, and the $103,265 fee is not currently in effect. Public comments on the proposed rule are due 30 days after Federal Register publication, which we expect to fall around September 24, 2026.

What Happened

The proposed rule, issued jointly by the DHS and U.S. Citizenship and Immigration Services (USCIS) under DHS Docket No. USCIS-2026-0298 and RIN 1615-AD20, would add a new $103,265 fee for H-1B cap-subject petitions. The fee would apply only to petitions selected in the annual H-1B lottery, including beneficiaries counted against the 20,000 U.S. master’s degree exemption. It would not apply to cap-exempt H-1B filings, such as those for beneficiaries employed at institutions of higher education, affiliated nonprofit entities, or nonprofit and government research organizations. It would not apply to petitions on behalf of individuals who hold H-1B status and are transferring to a new employer.

The $100,000 figure is not new. Presidential Proclamation 10973 first imposed a $100,000 payment on new H-1B petitions filed for workers outside the United States, effective September 21, 2025, as we discussed shortly after it took effect. A coalition of employers, unions, educational institutions, universities, religious organizations, and H-1B employees challenged the Proclamation in court, litigation we tracked as it developed. On June 8, 2026, the U.S. District Court for the District of Massachusetts vacated the Proclamation as an unlawful tax, though the court briefly allowed fee collection to continue while the government sought appellate review. On July 24, 2026, the First Circuit Court of Appeals declined to reinstate the fee, leaving the $100,000 payment vacated and unenforceable while the government’s appeal remains pending.

DHS states that the purpose of the proposed new rule is to generate dedicated revenue, projected at roughly $8.8 billion a year, to help fund the costs of administering the broader immigration system, not only at USCIS but also at Customs and Border Protection, Immigration and Customs Enforcement, the Executive Office for Immigration Review, the State Department, and the Department of Labor. Unlike the $100,000 payment required under Proclamation 10973, which rests on the President’s authority to restrict entry, this proposed $103,265 H-1B fee claims to be an exercise of DHS’s existing fee-setting authority under section 286 of the Immigration and Nationality Act (INA). That distinction means this proposed fee will proceed on its own regulatory timeline, independent of the pending appeal over the proclamation-based $100,000 fee.

What the $103,265 H-1B Fee Would Mean for Employers

If finalized as proposed, the $103,265 H-1B fee would meaningfully change the cost calculus of H-1B sponsorship. DHS’s own analysis anticipates that 76 percent of small entities that file cap-subject H-1B petitions would see a cost increase exceeding 1 percent of their revenue, a threshold DHS treats as economically significant. Employers preparing for the FY 2027 H-1B cap season should begin factoring this potential cost into sponsorship budgets now, and should evaluate alternatives to the H-1B, if possible.

For foreign national employees, the more immediate effect is likely to be increased selectivity by sponsoring employers rather than any direct cost, since the fee is payable by the petitioning employer and existing wage rules already prohibit employers from passing H-1B filing costs on to the worker. Employers should also be aware that Proclamation 10973’s separate $100,000 payment requirement is scheduled to expire on September 21, 2026, regardless of the outcome of the appeal we discussed in our prior alert. That timing means the interplay between the two fees may resolve on its own before this proposed $103,265 fee could ever take effect.

What to Expect Next

The fee will not take effect unless and until DHS reviews public comments, which is required, before it publishes the final rule.

The proposed rule may draw a legal challenge, distinct from the one that unsettled Proclamation 10973. The H-1B fee claims to be an exercise of DHS’s existing fee-setting authority under section 286 of the Immigration and Nationality Act. The $103,265 fee would be deposited into the Immigration Examinations Fee Account (IEFA), the account Congress created under section 286 to fund USCIS adjudication and naturalization services. Under the proposed rule, however, the fee collected greatly exceeds the costs of administering USCIS services, and the rule proposes that a substantial share of that revenue would be diverted to activities outside USCIS. Under the rule, collected fees would be reallocated to other DHS components and cabinet agencies with no role in the IEFA’s statutory purpose, among them the Departments of Justice, State, and Labor. The rule is likely to be challenged on the basis that only Congress can authorize collection of money over and above the costs of USCIS operations. Additionally, the proposed cross-agency and cross-department diversion would be unlawful expenditure of federal funds for purposes Congress has not appropriated, a separation-of-powers concern similar to but distinct from the arguments that led courts to vacate Proclamation 10973.

DHS anticipates this challenge in the proposed rule and proactively asserts that its fee-setting authority under INA sections 286(m) and (n) extends to recovering costs incurred by other agencies that are directly related to providing immigration adjudication and naturalization services, and that H-1B petitioners have a greater ability to pay than other fee populations. DHS acknowledges, however, that it has never applied this authority so broadly before, and it has left the specific mechanics for reimbursing other agencies to be defined through future interagency agreements.

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