The Department of Homeland Security is not backing down on its push to dramatically raise the cost of hiring skilled foreign workers — and it is now pursuing two parallel tracks to make it happen.
On August 25, 2026, DHS published a notice of proposed rulemaking that would add a $103,265 fee to every H-1B cap-subject petition, payable at the time of filing, on top of every other fee an employer already pays.
The fee would apply to all H-1B cap-subject petitions, including those eligible for the advanced degree exemption, and would be imposed in addition to all other applicable fees or payments.
The announcement arrives less than three months after a federal judge struck down the administration's earlier $100,000 H-1B surcharge — and while the government's appeal of that ruling remains unresolved.
A New Legal Strategy for an Old Fight
The backstory is essential to understanding what DHS is doing here.
On September 19, 2025, a Presidential Proclamation introduced a new requirement mandating that employers pay a $100,000 fee when petitioning for certain new H-1Bs.
That proclamation, known as Proclamation 10973, was challenged almost immediately.
On December 12, 2025, a coalition of state attorneys general filed a lawsuit in the U.S. District Court for the District of Massachusetts challenging the fee introduced by the Presidential Proclamation.
On June 8, 2026, the U.S. District Court for the District of Massachusetts issued a significant decision vacating the Presidential Proclamation that imposed a $100,000 fee, with the ruling issued by Judge Leo T. Sorokin granting summary judgment in favor of the plaintiffs.
The court ruled that the $100,000 H-1B fee was unlawful, concluding that the administration's implementation exceeded executive authority and violated the Administrative Procedure Act and constitutional separation of powers, emphasizing that Congress — not the Executive Branch — holds the authority to impose taxes or fees of this magnitude.
The government moved quickly.
On June 11, 2026, the administration filed an appeal of the district court's decision and on June 12, 2026, asked the district court to stay its decision.
But that effort ultimately stalled.
On July 24, 2026, the U.S. Court of Appeals for the First Circuit denied the federal government's request to pause the Massachusetts district court ruling. Because the stay was denied, the fee is not currently enforceable while the government's appeal proceeds.
In reaching its decision, the court concluded that the government failed to make a strong showing that it is likely to succeed on the merits of its appeal.
Now, barely a month later, DHS is taking a different legal path to a remarkably similar destination.
Inside the $103,265 Proposed Rule
This new $103,265 charge skips the proclamation route entirely. DHS is pursuing it through formal rulemaking instead, leaning on a cost-recovery authority found in the Immigration and Nationality Act.
The proposed fee would generate revenue to recover a portion of the federal government's costs for administering the lawful immigration system, including adjudication of immigration benefits, fraud detection and national security vetting, systems modernization, records and fee collection operations, immigration court operations, consular visa processing, labor standards enforcement, and interagency coordination.
DHS estimates that the fee would generate approximately $8.8 billion annually and would be used to recover costs associated with administering the broader lawful immigration system.
The scope is broad.
The proposed rule would add a new provision to the USCIS fee schedule that applies the fee to all H-1B petitions subject to the annual cap, including petitions filed under the 20,000-visa advanced degree exemption for holders of U.S. master's degrees or higher.
However,
cap-exempt petitions, which are filed by institutions of higher education, affiliated nonprofits, and nonprofit or governmental research organizations, would not be subject to this fee.
DHS concedes the fee is "close to" the $100,000 payment under Proclamation 10973, a policy that Judge Sorokin vacated on June 8, 2026.
But the agency characterizes it as legally distinct — grounded in statutory fee-setting authority rather than presidential executive action.
The Stacking Problem: Potential $200,000+ in Government Fees
One of the most alarming revelations in the proposed rule is the potential for fee stacking.
DHS says that if the $100,000 proclamation payment is again enforceable and the proclamation is extended or renewed so that both requirements overlap, a petitioner subject to both could have to pay both amounts. Stack them together, and total fee exposure for a single hire could top $200,000 — and that's before wages, attorney fees, or anything else that goes into sponsorship.
Before the proclamation, H-1B filing fees already ranged between approximately $960 and $7,595, depending on the employer's size and petition type. The addition of a $100,000 surcharge represented a dramatic increase that put H-1B sponsorship financially out of reach for many small and mid-sized employers.
Impact on Employers, Workers, and the Labor Market
The practical consequences could be severe — especially for smaller companies and for foreign professionals seeking H-1B status.
DHS's own analysis estimates the rule would have a significant economic impact on 11,051 small entities (76% of the small entities that filed cap-subject petitions in FY 2025) and identifies no alternative that would reduce that burden.
The proposed rule does not address whether the fee would be returned if a petition is denied, rejected, or withdrawn.
For international students on OPT considering H-1B sponsorship, this rule could dramatically narrow the pool of employers willing to sponsor them.
The fee would apply only after a worker is selected in the lottery and the employer files the petition.
While the cost falls formally on employers, immigration experts widely note that economic costs of this magnitude inevitably shape which workers get hired and which do not.
Analysts point out that the proposed rule justifies the tax, in part, by claiming it is needed to provide more money to Immigration and Customs Enforcement, even though Congress appropriated approximately $75 billion for ICE in 2025 and $39 billion in 2026.
Legal Challenges Ahead
Immigration attorneys are already forecasting a wave of litigation.
Plaintiffs will argue that this rulemaking is an attempt to accomplish through Section 286(m) what the proclamation could not accomplish through Section 212(f), and that the stated cost-recovery rationale is a post hoc justification for a predetermined number.
Immigration attorneys have suggested the fee amount itself could be challenged as arbitrary and capricious under administrative law.
A challenge cannot be filed until a final rule issues, since the NPRM is not final agency action. However, expect complaints filed within days of publication of a final rule, along with motions for preliminary injunction or expedited summary judgment.
Meanwhile, the clock is ticking on the original proclamation.
The timing of the Proclamation's expiration is increasingly important: by its terms, Proclamation 10973 imposes a temporary 12-month restriction that will expire on September 20, 2026, unless extended.
The government's merits appeal on the $100,000 fee remains pending, with briefing expected to conclude in October 2026.
Two other federal lawsuits over the fee remain pending, and in one instance, the district court has determined that the fee did fall within the president's existing authority. That suit is now pending appeal at the U.S. Court of Appeals for the D.C. Circuit.
With multiple pending challenges in different circuits, the Supreme Court will likely weigh in.
What Should Employers and Applicants Do Now?
While the proposal has already generated significant concern among employers, it is important to note that the fee is not currently in effect.
The proposal is in the notice-and-comment stage, and DHS is accepting comments through September 24, 2026.
This proposed rule does not immediately change current H-1B fees. Before this could go into effect, DHS would have to accept and respond to public comments, amend the proposed rule, clear White House review, and publish a final rule with an effective date.
Employers and stakeholders who want to have their voices heard should act quickly.
Members of the public, including employers and other members of the business community, can submit public comments at regulations.gov. Public comments must include the rule's document ID: USCIS-2026-0298-0001.
For now, the H-1B landscape remains in a state of extraordinary flux. Between an active appellate battle over the $100,000 proclamation fee, a proposed rulemaking for an even larger charge, and a proclamation set to expire in days, employers and foreign workers alike face a level of uncertainty that demands close consultation with experienced immigration counsel.
ClinchLaw will continue to monitor this developing story and provide updates as the comment period closes and the litigation progresses.