NextFin News - The Trump administration is moving to impose a six-figure fee on certain H-1B work visas through formal regulation, weeks after a federal appeals court let stand a ruling that struck down the same charge when it was imposed by presidential proclamation. The shift from executive order to rulemaking is the administration's answer to the courts — and it makes the fee slower to arrive but harder to kill.
The Department of Homeland Security's proposed rule, titled "Fee for Certain H-1B Petitions" (RIN 1615-AD20), cleared White House regulatory review on Aug. 19, 2026, according to the Office of Information and Regulatory Affairs record. The proposal is flagged as economically significant and a major rule, which triggers a regulatory flexibility analysis because small businesses would be affected. The rule text has not yet been published in the Federal Register, so the exact fee amount, scope, and effective date remain unknown. What is known is the direction of travel: after a federal judge vacated the $100,000 proclamation-based fee in June, the administration is rebuilding it through the one legal channel that can survive judicial review.
The Proclamation Path Just Died in Court
To understand why the rulemaking matters, start with what it replaces. On Sept. 19, 2025, President Trump signed Proclamation 10973, "Restriction on Entry of Certain Nonimmigrant Workers," requiring a $100,000 payment for new H-1B petitions filed after 12:01 a.m. Eastern on Sept. 21, 2025. The charge applied mainly to beneficiaries outside the United States who needed consular processing. Renewals, extensions, and change-of-status filings for workers already in the country were exempt — a gap that would turn out to be the policy's fatal flaw.
The proclamation path worked briefly. On Dec. 23, 2025, U.S. District Judge Beryl A. Howell in Washington upheld the fee in Chamber of Commerce v. DHS, calling it a lawful restriction on entry rather than a tax. But in January 2026, California and 19 other attorneys general sued in the District of Massachusetts, arguing the president lacked the constitutional and statutory power to impose what they called an unlawful tax. On June 8, 2026, Judge Leo T. Sorokin agreed, vacating the policy in its entirety:
The Policy implementing the Proclamation is declared unlawful and is vacated in its entirety.
Sorokin's reasoning is the crux of the whole fight. He leaned on Supreme Court precedent — Bailey v. Drexel Furniture and NFIB v. Sebelius — plus the Supreme Court's recent tariff ruling in Learning Resources v. Trump, writing that the $100,000 payment "amounts to a tax, not a penalty" and that sections 212(f) and 215(a) of the Immigration and Nationality Act do not delegate Congress's taxing power to the president. On July 24, 2026, the First Circuit Court of Appeals denied the government's motion to stay the ruling pending appeal. DHS responded that it "will comply with the court's order while DHS considers next steps," while adding: "If this order is later lifted, DHS still plans to collect the payment."
The new rulemaking is that "next step." A regulation grounded in USCIS's fee-setting statutes can survive the Taxing Clause objection that killed the proclamation — provided the agency shows the fee is tied to the cost of the service or is otherwise authorized by Congress. That is why the economically significant flag on RIN 1615-AD20 matters: the rule will carry a detailed cost-benefit analysis that plaintiffs can attack, but that also gives the agency a defensible record.
The Fee Already Cost the Treasury Money
The administration's strongest argument for the fee is that it works as intended — deterring abuse and raising revenue. The early ledger says otherwise. As of mid-February, the government had received only 85 fee payments, worth $8.5 million in revenue, according to a government court filing in March. Connor O'Brien, an economic policy researcher at the Institute for Progress, calculated that fee revenue from H-1B applications filed from abroad fell by about $28 million over the same period — meaning the policy cost the government roughly $20 million net.
The mechanism is straightforward and it is the key insight for employers: the fee did not raise the price of foreign talent enough to deter hiring. It rerouted the hiring. Employers did not stop sponsoring workers; they sponsored workers who were already inside the United States on student or other visas, where the fee did not apply. A separate analysis comparing the period from Sept. 21, 2025, to Feb. 15, 2026, with the prior year found the policy coincided with a sharp pullback in H-1B filings for workers abroad, while domestic filings held up.
That pattern exposes the structural weakness of a fee aimed only at new entry. The H-1B pipeline has two doors: the overseas consular door, which the fee guarded, and the domestic change-of-status door, which it left open. Talent flowed through the open door. The result was a policy that raised $8.5 million while sacrificing $28 million in standard filing revenue — a net loss that opponents can now put in front of a judge reviewing the replacement rule's cost-benefit math.
Death by a Thousand Cuts
The six-figure fee is only the largest line item in a broader cost stack that has been building for months. In recent weeks DHS expanded screening fees for some employers, expanded immigration officers' discretion to reject petitions by rescinding guidelines that had instructed officers to request additional evidence likely to demonstrate eligibility, and signaled plans to terminate the 60-day grace period that lets H-1B workers job-hunt after a layoff. On Aug. 7, 2026, DHS published a final rule expanding the 9-11 Response and Biometric Entry-Exit Fee — $4,000 for H-1B petitions and $4,500 for L-1 petitions — to extension filings by covered employers, effective Sept. 9, 2026. The agency estimates the expansion will add $40.0 million in transfer payments in fiscal 2027.
Separately, a final rule published in July 2026 ends "duration of status" for F and J visa holders, effective Sept. 15, 2026, capping how long students can remain without new permission. And a proposed prevailing-wage overhaul would significantly raise required pay for many H-1B holders — most notably recent international students — adding tens of thousands of dollars to the cost of individual hires.
All of these changes—they're like death by a thousand cuts. It creates more administrative burden, it's more costly. And that impacts companies' views of how they're going to hire workers in the future.
Manish Daftari, a partner at global mobility firm Vialto Partners, summed up the cumulative effect: a program whose economics are being rewritten not in one blow but across a dozen separate actions — fee rules, wage rules, status rules, enforcement posture. That dispersion is politically and legally convenient: each piece is easier to defend alone than the whole would be together. But for employers, the total cost of the program is what matters, not the legal theory behind each component.
Market Reaction: The Pain Is Asymmetric
The H-1B program is a cornerstone of employment-based immigration for the U.S. technology sector. When the fee was first announced in September 2025, Indian IT services stocks fell between 2.26% and 3.88% in early trade, with Tech Mahindra, Infosys, HCL Tech, and Tata Consultancy Services among the decliners. U.S. tech employers — Microsoft, Nvidia, Amazon, and Meta among them — are also heavy users, though their exposure is diluted relative to India-based services firms that rely on moving large numbers of junior engineers across borders.
The second-order market read is that the pain is asymmetric. Large technology companies can absorb a six-figure fee per hire, relocate work to offshore offices, or accelerate green-card sponsorship for critical talent. Small and mid-sized employers, startups, universities, and nonprofits cannot. Commenters on the administration's earlier H-1B lottery reform — which replaced the random draw with a wage-weighted selection system effective Feb. 27, 2026 — warned that small businesses would be "priced out" of the program entirely. The combination of a wage-weighted lottery and a six-figure fee creates a compounding filter: lower-wage and entry-level roles face worse lottery odds and a higher price tag, pushing sponsorship toward senior, highly paid positions at large employers.
That is the real structural shift, and it is easy to miss behind the fee headlines. The program is being remade from a broad-based specialty-worker channel into a narrow, high-cost pipeline for experienced talent at deep-pocketed sponsors. Whether that strengthens or weakens U.S. competitiveness depends on whether you believe innovation comes from the marginal senior engineer or from the broad base of early-career talent that the new economics discourage.
What the Market Has Priced In — and What It Hasn't
Equity markets have already digested the September 2025 shock; the initial 2%-4% hit to Indian IT names is old news. What is not fully priced is the durability of the cost stack. Investors treating the June court ruling as the end of the story are looking backward. The administration has signaled, through both the H-1B fee rulemaking and a parallel proposal to charge foreign students up to $100,000 for Optional Practical Training work authorization, that the proclamation defeat is a detour, not a surrender.
The cross-asset implication runs through two channels. First, labor-cost expectations for U.S. tech: if the fee lands at or above $100,000 with broad scope, sponsors face a step-change in the fully loaded cost of overseas hires, which flows into margin models for services firms and into capex-on-talent assumptions for product companies. Second, the offshoring trade: higher U.S. entry costs make Canada, Mexico, India, and Eastern Europe relatively more attractive for early-career engineering, a multi-year reallocation that benefits those labor markets at the margin.
But the conventional read — "higher fees hurt tech stocks" — misses the offset. Companies that adapt fastest gain share of the constrained talent pool. "I have not come across an employer yet saying we're just not going to deal with H-1Bs anymore," said Emily Neumann, managing partner at Reddy Neumann Brown PC. "There's a genuine need at a lot of these employers, so for those workers they're going to continue with the process." Demand for top talent is inelastic; the fee changes who pays and how, not whether the hiring happens.
The Counter-Thesis: This Policy Defeats Itself
The strongest case against the administration's approach is that it is self-defeating on its own terms. The fee was justified, in part, by research claiming the revenue-maximizing price was above $100,000. Instead, the government collected $8.5 million and lost an estimated $28 million in other filing revenue — a net deficit of roughly $20 million. Employers did not stop hiring skilled foreigners; they hired the ones already in the country. The policy shrank the pie without taking a larger slice.
The legal counter-thesis runs parallel. A coalition of 20 states is still litigating, and the First Circuit appeal is pending. Even a rule grounded in fee-setting statutes can be challenged if the agency's cost-benefit analysis does not hold up, or if the fee is set so high that it functions as a de facto cap rather than a cost recovery measure. The December 2025 ruling that upheld the proclamation and the June 2026 ruling that vacated it show how finely balanced the courts are on this issue; a rulemaking does not end the litigation, it changes the battlefield.
This counter-thesis deserves its full weight because it attacks the core premise: that the administration can raise the cost of the H-1B program at will. The revenue data suggest it cannot — demand is too elastic at the margin, and the domestic loophole is too large. If the new rule repeats the proclamation's design, it will repeat the proclamation's result.
What Comes Next
The immediate catalyst is publication. Once RIN 1615-AD20 appears in the Federal Register, a comment period opens — typically 30 to 60 days — followed by agency review and a final rule that must clear White House review again. That process typically runs many months, which is why the rulemaking is slower than a proclamation. It is also why it is more durable: a final rule with a robust record is far harder to vacate than an executive action.
Short term, uncertainty dominates. "No one is dramatically changing their recruiting," said Matthew Meltzer, a partner at Meltzer Hellrung LLC, citing both the time needed to overhaul corporate hiring processes and the unresolved court battle. Medium term, if the rule lands at or above $100,000 with broad scope, expect a further shift toward in-country hiring, more offshoring of entry-level work, and faster green-card sponsorship decisions for retained talent. Long term, the structural direction is clear: the administration is replacing a legally fragile proclamation with a legally durable regulation. Even if this specific fee is blocked again, the cost burden on the program is rising through other channels — biometric fees, screening fees, wage floors, and status limits.
Scenarios, by trigger:
- Base case: the rule publishes within weeks, draws heavy industry comment, and is finalized in modified form by early 2027 at a level near the old $100,000 benchmark, focused on new consular filings.
- Upside for employers: courts block the fee again and the rule is narrowed to consular filings with broad exemptions, leaving the domestic pipeline largely intact.
- Downside for employers: the fee is set above $100,000 and applied broadly, including to change-of-status filings, accelerating the exodus from the H-1B pipeline and pushing more early-career work offshore.
The falsifying signal for the structural-cost thesis is specific: if the published rule sets a fee at or below the old $100,000 level with a narrow scope limited to new consular filings, the "escalating structural cost" call weakens materially. The falsifying signal for the self-defeating counter-thesis is equally specific: if the First Circuit reinstates the fee and collections exceed $100 million in a quarter, the revenue-loss argument fails.
Bottom Line
The administration is not abandoning the six-figure H-1B fee; it is re-filing it through the one legal channel that can survive court review. That makes the fee more likely to arrive, slower to arrive, and more expensive to fight. For employers, the strategic question is no longer whether the cost of the program will rise — it will — but whether their hiring model can absorb a permanent, rule-based cost stack instead of a temporary, order-based one.
The proclamation was a bluff the courts called. The rulemaking is the hand the administration is now playing for real — and this time, the cards are harder to throw out.
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