A $103,265 per-petition charge, payable upfront on every cap-subject H-1B filing, is now the number that belongs in every HR director's 2027 workforce cost model. The U.S. Department of Homeland Security (DHS) published the proposed rule in the Federal Register on August 25, 2026, under docket USCIS-2026-0298, with a 30-day public comment window closing around September 24, 2026. For CHROs and People leaders, the immediate task is not to wait for litigation to resolve, but to stress-test hiring strategies against three distinct scenarios before the comment period closes.

The scale of the proposed fee is the story. DHS expects the charge to apply to roughly 85,000 cap-subject petitions annually and generate about $8.8 billion each year, or $74.9 billion over a decade, according to the agency's own regulatory impact analysis. The $103,265 figure was calculated by dividing $8,777,488,035 in target cost recovery across 85,000 projected petitions, then rounding to the nearest $5. Critically, that math is not calibrated to the cost of adjudicating a single H-1B petition. U.S. Citizenship and Immigration Services (USCIS) itself receives only about 34% of the proceeds, with the remainder allocated across the Executive Office for Immigration Review (EOIR), the Department of Labor (DOL), U.S. Immigration and Customs Enforcement (ICE), the Department of State (DOS), and U.S. Customs and Border Protection (CBP). For HR teams modeling per-hire costs, that distribution matters: this is immigration-system financing, not petition-adjudication pricing.

What actually changed, and what did not

Before the September 2025 presidential proclamation that first imposed a $100,000 H-1B payment, cap-subject filings typically carried roughly $2,000 to $5,000 in government fees. U.S. District Judge Leo Sorokin of the District of Massachusetts vacated the $100,000 fee on June 8, 2026, ruling that the President had no delegated authority to impose what functioned as a tax on H-1B petitions. The First Circuit declined on July 24, 2026 to stay that order while the government's appeal proceeds. The original proclamation is scheduled to expire on September 21, 2026 unless extended.

The new $103,265 rulemaking is DHS's attempt to reach a similar policy outcome through the notice-and-comment fee-setting process under the Administrative Procedure Act, rather than executive proclamation. Codified at 8 CFR 106.2(a)(3)(xii) under docket USCIS-2026-0298, the fee would apply to all cap-subject petitions, including those filed for F-1 students already inside the United States seeking to change status to H-1B. That represents a material expansion relative to the earlier proclamation, which did not reach F-1-to-H-1B conversions. Cap-exempt petitions filed by universities, affiliated nonprofits, nonprofit research organizations, and governmental research organizations remain outside the fee's scope.

The employer profile that gets squeezed hardest

DHS's own regulatory impact analysis estimates the rule would have a significant economic impact on 11,051 small entities, representing 76% of small employers that filed cap-subject petitions in FY 2025. In that fiscal year, 28,649 different employers filed initial cap-subject H-1B petitions, and DHS identified 14,541 of those employers as small entities. USCIS received an average of 96,750 cap-subject petitions per year between 2021 and 2025.

Xiao Wang, CEO of Boundless Immigration, has been precise about where the fee lands: the $103,265 charge does not apply to students changing status inside the U.S. or to in-country employer transfers, but falls squarely on workers entering from abroad. That profile describes most new-hire H-1B talent coming into tech, engineering, and life sciences from overseas pipelines. DHS framed the employer's capacity to absorb the fee by pointing to a FY 2025 H-1B median compensation of $133,000 and an unadjusted median wage of $798,000 over a six-year admission period. For HR leaders, the implication is direct: DHS views a six-figure fee as proportionate to a six-figure wage. Whether a given organization shares that view depends less on sector medians and more on whether the employer can absorb $103,265 upfront on a lottery outcome that may not produce a workable start date for months. Xiao Wang of Boundless added that for startups and smaller companies especially, this structure could fundamentally change who can afford to compete for global talent.

Hiring behavior is shifting, and the data confirm it

Registration data show demand compression has already begun, driven by policy uncertainty well before this rulemaking was finalized. Employers registered for about 344,000 H-1B visas in the prior year, down more than 25% from 2024 and fewer than half of the 794,000 registrations sought in 2023. Companies submitted about 211,000 eligible entries for the FY 2027 lottery, down more than 38% from FY 2026. As of late February, only about 70 employers had paid the $100,000 proclamation fee on a total of 85 visa applications, a volume that signals how quickly employer demand collapses at that price point.

The pattern extends to large-volume filers. TCS secured 4,450 H-1B approvals for FY26, down from 6,126 the year before. Infosys moved in the opposite direction, from 2,856 to 4,113. Talent consultancy Xpheno data show about 15,100 technology professionals returned to India in 2025 versus 9,800 the year before. Kamal Karanth, co-founder of Xpheno, told Deccan Herald that manpower and man-hours are the raw material for the IT services sector, so any disruption to deployment will instantly and significantly affect revenue outlook.

The substitution risk for U.S. employers is documented by Britta Glennon, assistant professor at the University of Pennsylvania Wharton School, whose research shows that when multinational companies cannot access H-1B visas, they become much more likely to open a foreign affiliate abroad or expand hiring at existing foreign affiliates, in other words, they offshore jobs. For HR teams currently managing a headcount-constrained hiring plan, that is the scenario worth modeling now, not after litigation calendars produce rulings.

Where the pipeline breaks: F-1 conversions, healthcare, and education

A NAFSA survey found that 63% of cap-subject H-1B employers reported that at least half of their initial H-1B petitions are filed on behalf of F-1 students at U.S. universities. The proposed rule's decision to include F-1-to-H-1B conversions inside the $103,265 fee therefore hits the education-to-workforce pipeline directly. Zuzana Wootson, deputy director of federal policy at the Presidents' Alliance on Higher Education and Immigration, argued that the rule would severely weaken the education-to-workforce pipeline and make the United States a far less attractive destination for the world's most talented students.

Jeff Joseph, president of the American Immigration Lawyers Association (AILA), framed the sector exposure plainly: the fee would shut out employers that use H-1Bs to fill job openings for essential staff including teachers, researchers, rural doctors, and clergy. Rural hospitals, nursing homes, K-12 districts, and regional university systems are the employer segments where a $103,265 cash outlay per petition is not a rounding error against a six-figure salary. For those organizations, it frequently represents a multiple of the annual training or recruiting budget for the role.

Computer-related occupations accounted for 62% of approved H-1B beneficiaries in FY 2025, so the technology sector captures most of the volume. For HR leaders in healthcare and higher education, the concentration risk is structurally different: a foreign-hire strategy that depends on a handful of roles per year faces immediate service-delivery gaps if any of those petitions fail, and domestic recruitment cycles cannot close those gaps on the same timeline.

The parallel policy stack HR should be tracking

The $103,265 fee is not moving in isolation. DHS on August 10, 2026 finalized a separate rule expanding a biometric fee ($4,000 for H-1B petitions, $4,500 for L-1 petitions) to certain extension petitions filed by employers with 50 or more U.S. employees where more than 50% hold H-1B or L-1 status, effective September 9, 2026. A distinct DHS-proposed rule currently under White House Office of Information and Regulatory Affairs (OIRA) review would tighten H-1B contractor oversight and revise cap-exemption eligibility. DHS has also proposed eliminating the 60-day grace period for current H-1B holders whose employment ends before their visa expires.

On the wage side, the Department of Labor proposed a rule in March to lift prevailing wage rates. Under that proposal, entry-level software engineers in San Francisco would face a minimum wage floor of $162,000, up 30% from the current requirement. A wage-weighted lottery structure under consideration would enter the highest wage group four times, the next three times, the next twice, and the lowest once, concentrating lottery advantage in senior-level filings. Combined, the wage floor and the $103,265 fee push in the same direction: away from early-career hires and away from smaller employers.

Caroline Tang, a shareholder at Ogletree Deakins, told HR Dive that the accumulation of these changes may produce a chilling effect for employers across the board. Eileen Lohmann, an attorney at BAL in Washington, D.C., added that if the fee is finalized as proposed, it will likely face immediate litigation, citing the same fee-authority questions that grounded Judge Sorokin's June ruling. Specifically, the agency is justifying the fee based not only on USCIS needs but on the needs of other federal agencies, and proposes to allocate the majority of revenue to those other agencies, which raises significant questions about the scope of USCIS fee authority.

Three planning scenarios HR leaders should be running now

Three scenarios are worth stress-testing before the comment window closes and the litigation timetable begins producing rulings.

1. Fee takes effect on cap-subject filings from FY 2028 onward. Model the fully-loaded cost per H-1B hire at $103,265, plus existing USCIS filing fees, legal costs, and the expanded biometric charge where applicable. Identify which roles clear an internal return-on-investment threshold at that price and which do not. For most organizations, the pool of roles that survives this test skews senior, revenue-generating, and hard to source domestically within a competitive hiring window.

2. Fee is enjoined or vacated, but policy pressure continues. Even without the $103,265 charge, the wage-weighted lottery proposal, the biometric fee expansion, the 60-day grace-period removal, and the contractor oversight rule collectively raise the cost and compliance risk of an H-1B-dependent staffing model. Under every plausible scenario in this category, retention of onshore H-1B talent is the lower-cost strategy compared to new petition volume. HR functions with meaningful H-1B populations onshore should be auditing total compensation, career-path visibility, and internal mobility against current market benchmarks before attrition decisions are made for them.

3. Substitution strategies. Offshoring, foreign-affiliate expansion, cap-exempt filing pathways for qualifying research and academic roles, and domestic pipeline investment in the U.S. STEM funnel all become more attractive at the margin. NASSCOM data show the Indian tech industry has spent more than $1.1 billion strengthening the U.S. STEM pipeline, working with more than 130 universities and impacting 2.9 million students. That existing infrastructure is the kind of resource the current policy stack risks unwinding at the point employers most need domestic alternatives.

Vice President JD Vance's public framing of the administration's intent, captured in a statement that American corporations needing workers should hire and train Americans, sets the political baseline. The workforce-planning implication is that domestic training pipelines will need to close a gap that H-1B currently fills, at a speed and scale that domestic universities and vocational systems have not historically operated at. For HR leaders in sectors where the H-1B share of hard-to-fill roles is material, quantifying that gap now, rather than in Q2 2027 when litigation rulings begin arriving, is the more defensible planning posture.

Key takeaways for workforce planning

• The $103,265 fee applies per cap-subject H-1B petition, payable upfront at filing. DHS expects roughly 85,000 filings annually if finalized. The public comment period closes around September 24, 2026.
• DHS estimates 76% of small employers that filed cap-subject petitions in FY 2025 face significant economic impact. Mid-market firms, hospital systems, and university-adjacent employers are the most exposed segments.
• F-1-to-H-1B conversions are inside the new fee's scope, unlike the earlier $100,000 proclamation. That breaks the education-to-workforce pipeline that 63% of cap-subject employers rely on for at least half of their initial H-1Bs, per NAFSA survey data.
• FY 2027 lottery entries fell more than 38% from FY 2026. Retention of onshore H-1B talent is now the lower-cost strategy across every plausible litigation outcome.
• Litigation risk is high. U.S. District Judge Leo Sorokin vacated the prior $100,000 fee in June 2026 on fee-authority grounds. Eileen Lohmann of BAL and others expect the same legal challenges will apply to the new rulemaking.
• A parallel DHS biometric-fee rule (effective September 9, 2026) and a DOL prevailing-wage proposal together compound the cost pressure on employers with large H-1B-dependent workforces.