Critics challenge the legality of the steep H-1B fee intended to fund the U.S. immigration system.
The Trump administration has proposed a $103,265 additional fee on employers filing cap-subject H-1B petitions, a move that could significantly increase the cost of hiring skilled foreign workers, including professionals from India.
According to the Department of Homeland Security, the fee would apply to all cap-subject petitions, including those filed for workers eligible for the advanced degree exemption. Employers would have to pay the fee at the time of filing, on top of existing H-1B fees and other applicable payments.
The proposal is not yet final. It is expected to be published in the Federal Register on Tuesday, triggering a 30-day public comment period.
DHS estimates that the proposed fee could generate around $8.8 billion annually, based on an estimated 85,000 cap-subject H-1B petitions each year.
US Citizenship and Immigration Services spokesperson Zach Kahler said the fee is intended to cover the federal government’s costs of processing, vetting and administering lawful immigration programmes, which would otherwise be funded by taxpayers.
The revenue would help offset part of the federal government’s costs of running the legal immigration system.
Under the proposal, the funds would cover expenses related to immigration benefit adjudication, fraud detection, national security screening, government system modernisation and records management.
The revenue would also support immigration courts, consular visa processing, labour standards enforcement and coordination among federal agencies, according to the proposed regulation.
DHS said the fee would help fund immigration-related activities carried out by US Citizenship and Immigration Services, Customs and Border Protection, Immigration and Customs Enforcement, the Justice Department’s immigration courts, the State Department and the Department of Labor.
The proposed fee would not apply to cap-exempt H-1B petitions filed by certain nonprofit research organisations, government research institutions and institutions of higher education.
The annual H-1B programme is capped at 65,000 visas, with an additional 20,000 slots reserved for foreign nationals who hold a master’s degree or higher from a US institution.
DHS said the fee would be applied uniformly, regardless of an employer’s size or nonprofit status. Its analysis found that 14,541 of the 28,649 organisations that filed cap-subject petitions in fiscal 2025 were small entities.
The department estimated that the proposed rule would have a significant financial impact on 11,051 small entities, accounting for 76 per cent of the small organisations included in its analysis.
FWD.us President Todd Schulte described the proposal as a “massive tax on American businesses”, arguing that it is part of a broader effort to weaken legal immigration.
Schulte warned that measures such as the proposed H-1B fee, which he called an “innovation tax,” along with a reported tax on Optional Practical Training, could make it harder for US companies to attract top global talent and maintain their economic competitiveness.
He argued that such policies could encourage jobs and businesses to move overseas, ultimately leaving workers worse off.
Questions over legal authority
Schulte also questioned whether the government has the legal authority to impose a fee that goes beyond the direct cost of processing an individual H-1B petition.
“This proposed tax clearly violates the law by charging far more than is permitted, which should be limited to the cost of adjudicating an H-1B petition,” Schulte said.
DHS, however, argued that federal immigration law allows the government to set fees at levels sufficient to recover the full cost of immigration adjudication and naturalisation services.
The department also said employers sponsoring cap-subject H-1B workers are generally better positioned to absorb the additional cost than individual immigration applicants.
The H-1B programme enables US employers to hire foreign professionals for specialised positions requiring advanced knowledge and expertise.
Technology, engineering, finance, medicine and research are among the key sectors that regularly rely on the H-1B programme.
