The Trump administration has proposed imposing an additional fee of $103,265 on employers filing cap-subject H-1B visa petitions, a move that could dramatically increase the cost of hiring skilled foreign professionals — including a large share of workers from India. The proposal was put forward by the Department of Homeland Security (DHS) and is set to be published in the Federal Register on Tuesday, 26 August, opening a 30-day public comment window before any final decision.

What the Proposed Fee Covers

The $103,265 charge would apply to every cap-subject H-1B petition — including filings for workers eligible under the advanced degree exemption — and would be levied in addition to all existing applicable fees. DHS said the fee would be imposed uniformly, regardless of employer size or non-profit status.

Notably, the proposal exempts cap-exempt petitions filed by certain non-profit research organisations, government research bodies, and institutions of higher education. The annual H-1B cap stands at 65,000 visas, with an additional 20,000 slots reserved for foreign nationals holding a master's degree or higher from a US institution.

How the Revenue Would Be Used

DHS estimated the fee would generate approximately $8.8 billion annually, based on a projected 85,000 cap-subject petitions per year. According to the proposed regulation, the funds would be directed toward immigration benefit adjudications, fraud detection, national security screening, modernisation of government systems, immigration courts, consular visa processing, labour standards enforcement, and inter-agency coordination.

Agencies set to receive a share of the revenue include US Citizenship and Immigration Services (USCIS), Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), the Justice Department's immigration courts, the State Department, and the Department of Labor.

USCIS spokesperson Zach Kahler said: 'The proposed H-1B fee is intended to recover the costs incurred across the federal government to adjudicate, vet, and support lawful immigration programs that otherwise must be funded by taxpayers.'

Impact on Small Businesses and Indian Professionals

DHS acknowledged in its own analysis that 14,541 of the 28,649 organisations filing cap-subject petitions in fiscal 2025 were small entities. The department estimated that the regulation would have a significant financial impact on 11,051 small entities, representing 76 per cent of the small organisations covered by its analysis.

Indian professionals are disproportionately represented among H-1B holders, particularly in technology, engineering, finance, medicine, and research — sectors that regularly depend on the programme to fill specialised roles requiring advanced knowledge.

Industry Pushback

FWD.us President Todd Schulte sharply criticised the proposal, calling it a 'massive tax on American businesses' and arguing it forms part of a broader effort to curtail legal immigration. 'Policies like the H-1B innovation tax and the rumored tax on Optional Practical Training will only hinder our ability to compete globally for top talent and economic leadership. Jobs and businesses will move overseas, and all workers will be worse off for it,' Schulte said.

Schulte also questioned the government's legal authority to set a fee that he argued far exceeds the actual cost of processing a single petition. 'This proposed tax clearly violates the law by charging far more than is allowed, which should be the cost to adjudicate an H-1B petition,' he said.

DHS, however, maintained that federal immigration law permits fees to be set at a level sufficient to recover the full cost of immigration adjudication and naturalisation services, adding that cap-subject H-1B employers are generally more able to bear such costs than individual immigration applicants.

What Happens Next

The proposal is not yet final. Stakeholders — including tech industry groups, immigration lawyers, and advocacy organisations — have 30 days from the Federal Register publication date to submit public comments. The final rule, if adopted, could reshape hiring strategies across US industries that rely heavily on high-skilled foreign talent, with significant downstream consequences for Indian professionals and their employers.