H-1B Visa Demand Plummets Amid New Fees and Legal Battles

H-1B Demand Drops Sharply Amid New Fees and Legal Battles

The H-1B visa program, a key pathway for U.S. companies to hire skilled foreign workers, has seen a significant drop in demand. This decline is largely due to a substantial fee introduced by the Trump administration in September 2025, which led to a sharp decrease in employer participation. While courts initially blocked this fee, the Department of Homeland Security (DHS) has since proposed a new, even higher charge, indicating ongoing efforts to alter the program’s cost structure.

The Impact of the $100,000 Fee on H-1B Registrations

In September 2025, the Trump administration implemented a $100,000 fee for certain H-1B workers entering from abroad. This policy had an immediate and dramatic effect on employer participation in the H-1B lottery. Data from the Department of Homeland Security revealed that companies most reliant on overseas H-1B hiring saw their registrations plummet by 85% to 100%. This impact was particularly concentrated among IT staffing and technology firms, which are frequent users of the H-1B program.

The latest H-1B registration cycle saw approximately 344,000 entries. This represents a decrease of over 25% compared to the previous year and is less than half the 759,000 registrations recorded in 2023. The H-1B system has an annual cap of 85,000 new visas, split between 65,000 regular-cap visas and 20,000 reserved for those with U.S. advanced degrees. Typically, demand far exceeds this cap, necessitating a lottery system for selection. The new fee significantly altered the financial calculations for companies looking to hire foreign talent.

Legal Challenges and the Fee’s Disruption

The surcharge imposed in September 2025 caused considerable hiring disruptions for various organizations, including hospitals, universities, and technology companies. These institutions reported difficulties in their recruitment processes after the policy went into effect. The situation escalated when a federal court in Massachusetts halted the policy in June 2026. U.S. District Judge Leo Sorokin ruled that the fee acted as an unlawful tax, requiring congressional approval. The First Circuit later declined to reinstate the fee, leaving the government’s appeal pending.

Judge Sorokin’s ruling clearly stated that “The President had no power or delegated authority to impose a tax on H-1B petitions.” Despite this legal setback, the fee had already influenced employer behavior, particularly affecting those hiring workers from overseas and those requiring consular processing. The court’s decision highlighted a fundamental disagreement over the executive branch’s authority to impose such charges without legislative action.

Analyzing the Registration Figures and Revenue Impact

The available data provides a clear picture of where the demand for H-1B visas has fallen. Companies identified by DHS as being most affected by the fee filed 68% fewer cap registrations between fiscal year 2026 and fiscal year 2027. This indicates a more severe contraction among specific user groups than the overall registration numbers might suggest.

During the first five months the fee was in effect, the government collected $8.5 million from 85 applicants from abroad. However, applications dropped by 87% during this period, leading to a reduction in agency revenue by $28 million. Critics argued that the policy unfairly restricted access to a program already limited by its statutory cap. DHS, however, defended the fee as a necessary measure to recover federal administrative costs and to encourage employers to consider qualified U.S. workers before seeking foreign talent.

DHS Proposes a Higher Replacement Charge

Following the court’s rejection of the initial fee, the administration has not abandoned its efforts to increase the cost of H-1B petitions. On August 24, 2026, DHS proposed a new charge of $103,265 for cap-subject petitions. This proposal aims to achieve the administration’s goal of generating revenue for immigration administration through a different regulatory approach.

A spokesperson for U.S. Citizenship and Immigration Services, Zach Kahler, stated that the proposal would support “immigration programs that otherwise must be funded by taxpayers.” DHS further explained that the measure would “generate additional revenue to support the costs of administering the lawful immigration system.” The agency acknowledged that this higher price could lead to a reduction in participation, noting that “some employers, including small entities, may file fewer petitions as a result of this proposed rule.” Despite this acknowledgment, DHS deemed the fee “appropriate,” and the proposed amount is higher than the charge that caused the steepest decline in registrations during the previous cycle. The government’s appeal of the earlier court ruling remained pending as of late summer 2026, creating an environment of uncertainty for employers and potential H-1B visa applicants.

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