DHS's New $103,265 H-1B Fee: The Tax Comes Back as a Rule

Two federal courts struck down the $100,000 H-1B fee the administration imposed by proclamation. So DHS is trying again, this time as a regulation. A proposed rule published August 25, 2026 would charge $103,265 on every cap-subject H-1B petition, including advanced-degree cases, and route the money to six different agencies. The comment period closes September 24.

Going through notice-and-comment fixes the procedural problem that sank the proclamation. A court in Massachusetts had already vacated the $100,000 charge as an unlawful tax. But the new version runs into a different set of statutory limits on what USCIS may charge, and the rule’s own text is where the trouble starts.

The fee is not tied to the cost of adjudicating an H-1B. DHS arrives at $103,265 by dividing a target of roughly $8.78 billion in “costs to be recovered” by 85,000 projected petitions. The recovered money is then allocated across USCIS, the immigration courts (EOIR), the Labor Department, ICE, the State Department, and CBP. That allocation is where the rule is weakest.

USCIS is largely fee-funded, and its fee authority under 8 U.S.C. § 1356(m) ties charges to “the full costs of providing adjudication and naturalization services.” A fee designed to bankroll immigration courts, worksite enforcement, and consular operations is not a charge for adjudicating the petition in front of the officer. It is general revenue, which is what a tax is.

The revenue math has a second problem the rule itself admits: a six-figure fee will drive filings down, so the projected $8.8 billion is unlikely to materialize. DHS’s own fee-elasticity analysis reports that initial consular H-1B receipts had already fallen 91.2%, with FY2027 registrations at the largest consular-reliant employers down 80% to 100%. In Forbes, National Foundation for American Policy director Stuart Anderson, analyzing the same proposal, called the charge a $103,265 tax and flagged the gap between the projected revenue and the behavior the fee will cause.

The circularity is baked in: DHS projects the revenue on the assumption that employers keep filing at current volumes, while the same document concedes that the fee will suppress those volumes. A rule cannot both raise $8.8 billion and cut filings by 90%.

For employers, the practical read is that a lawsuit is a near certainty the moment a final rule issues, from state attorneys general, business coalitions, and immigration firms, and the challengers start from a strong position on the merits.

Where that leaves H-1B sponsors right now:

• This is a proposed rule, not law. Nothing is owed today. The $103,265 fee applies only if and when a final rule takes effect, and even then, expect an immediate court challenge.
• It is separate from the vacated proclamation. DHS built the rule on a different legal theory precisely because the proclamation was struck down. A win against one does not automatically decide the other.
• Comment while you can. The 30-day window closes September 24, 2026, and the administrative record built now shapes the litigation later.
• Plan cap-subject filings on the current fee schedule. Until a final rule is effective, standard Form I-129 fees apply.

The question the rule keeps raising is the one Kuck returns to: if an agency can raise $8.8 billion and fund five other agencies by relabeling a tax as a “fee,” the line between an adjudication charge and a revenue measure disappears. That is the argument a court will hear first, and it is the same argument that already sank the $100,000 version.