Breaking: DHS Proposes $103,265 Fee for H-1B Cap-Subject Petitions — Who Would Pay and Who Would Be Exempt?

On August 24, 2026, the U.S. Department of Homeland Security (“DHS”) released a new Notice of Proposed Rulemaking (“NPRM”) that would impose an additional $103,265 fee on H-1B cap-subject petitions. Unlike recent adjustments to other H-1B fees, the proposal would not simply increase the existing Form I-129 filing fee. Instead, the $103,265 would be charged in addition to other applicable filing fees.

The proposed rule has not yet taken effect.

If you have questions about the scope of the proposed rule, whether an H-1B petition may be cap-subject, or how the proposal could affect your company’s H-1B hiring strategy and immigration budget, please contact the ILS Immigration Team at immigrationlaw@consultils.com.

What Is a Cap-Subject H-1B Petition?

The H-1B program is subject to an annual numerical limit, commonly known as the H-1B cap. Currently, the annual allocation consists of:

• 65,000 Regular Cap numbers; and

• 20,000 U.S. Master’s Cap numbers for eligible beneficiaries who have earned a master’s degree or higher from a qualifying U.S. institution.

If an employee has not previously been counted against the H-1B cap and an employer must obtain a new H-1B cap number for that employee through the annual selection process, the H-1B petition filed after selection is generally considered a cap-subject petition. Put simply: Requires a new H-1B cap number = Cap-Subject

Common examples include:

• An F-1/OPT employee selected in the H-1B cap for the first time;

• An eligible U.S. advanced-degree holder selected under the U.S. Master’s Cap; and

• Other cases in which the beneficiary is required to become subject to the H-1B cap again.

By contrast, if an employee has already been counted against the H-1B cap and is simply seeking a qualifying extension or change of employer/transfer, or the petition otherwise qualifies for a cap exemption, the new petition generally would not be considered cap-subject.

This distinction is critical because the key question under the proposed $103,265 fee is not whether a new petition is being filed, but whether the petition requires a new H-1B cap number.

Which H-1B Petitions Would Be Subject to the $103,265 Fee?

Under the current proposal, the additional fee would apply to H-1B cap-subject petitions.

H-1B Petition	Proposed $103,265 Fee?	Explanation
Regular Cap petition filed after selection	Yes	Cap-subject petition
U.S. Master’s Cap petition filed after selection	Yes	Advanced Degree Exemption is included
F-1/OPT to H-1B change of status in the U.S.	Yes*	If selected under the cap and a cap-subject petition is filed
H-1B petition for a beneficiary outside the U.S.	Yes*	If the petition is cap-subject
Other petitions requiring the beneficiary to become subject to the H-1B cap again	Yes*	Depends on the beneficiary’s specific cap status

* The key distinction is not whether the beneficiary is inside or outside the United States,

but whether the H-1B petition is cap-subject.

DHS states that the proposed fee would apply to all H-1B cap-subject petitions and estimates that approximately 85,000 petitions per year would be subject to the fee.

Already Have H-1B Status? Would an Extension or Change of Employer Trigger the Fee?

Under the proposed rule as currently written, generally no.

This is one of the most important—and potentially misunderstood—aspects of the proposal. For beneficiaries who have already been counted against the H-1B cap, an Extension of Stay or Change of Employer during the standard six-year H-1B period generally does not require a new H-1B cap number and therefore falls within the cap-exempt framework.

Certain H-1B workers may also qualify for extensions beyond the standard six-year limit under the American Competitiveness in the Twenty-First Century Act (“AC21”).

For example, qualifying employees may be eligible for H-1B extensions where certain employment-based permanent residence filings have reached the applicable waiting period, or where an approved I-140 petition cannot yet lead to permanent residence because an immigrant visa number is unavailable. Qualifying AC21 extensions are likewise treated as cap-exempt under the proposal and therefore would not be subject to the additional $103,265 fee.

Under the proposal as currently written:

Common Scenario	Additional $103,265 Fee
Previously counted against the cap → H-1B Extension	Generally No
Previously counted against the cap → H-1B Transfer / Change of Employer	Generally No
Previously counted against the cap → Amendment that does not make the petition cap-subject	Generally No
Qualifying AC21 extension beyond the six-year limit	No
Other qualifying cap-exempt H-1B petitions	No

In other words, filing a new Form I-129 does not automatically mean the employer would owe the $103,265 fee. Employers should first determine whether the particular petition requires a new H-1B cap number.

Which Other Cap-Exempt H-1B Petitions Would Not Be Subject to the Fee?

In addition to extensions and changes of employer for beneficiaries who have already been counted against the cap, current law provides other exemptions from the annual H-1B cap.

For example, qualifying petitions involving the following employers or positions may be exempt from the annual cap:

• Institutions of higher education;

• Qualifying nonprofit entities related to or affiliated with institutions of higher education;

• Nonprofit research organizations; and

• Governmental research organizations.

DHS expressly states that the proposed $103,265 fee would not apply to cap-exempt H-1B petitions.

Accordingly, employers should not determine whether the additional fee applies simply by categorizing a filing as a “New Petition,” “Extension,” or “Transfer.” The more important question is the cap status of the particular petition.

Would Small Businesses and Nonprofit Organizations Be Exempt?

Under the current proposal, there is no automatic exemption from the $103,265 fee simply because an employer is a small business or nonprofit organization.

DHS’s economic impact analysis assumes that the fee would apply uniformly to cap-subject petitioners, regardless of employer size or nonprofit status. This could have a particularly significant impact on smaller employers that rely on H-1B hiring but operate with more limited talent acquisition budgets.

DHS estimates that, among 14,541 affected small entities, approximately 11,051—or 76%—could experience a significant economic impact from the proposed rule.

If finalized, employers sponsoring a new cap-subject H-1B worker may therefore need to account not only for wages, legal fees, and traditional USCIS filing fees, but also for an additional sponsorship cost exceeding $100,000.

What Could This Mean for Employers’ 2027 H-1B Hiring?

The Regulatory Impact Analysis accompanying the proposal uses FY 2027 through FY 2036 as its ten-year period of analysis and assumes that approximately 85,000 cap-subject H-1B petitions per year would pay the new fee.

If the rule is finalized substantially as proposed, employers planning to hire through future H-1B cap seasons should consider three key issues:

• Reassess H-1B sponsorship budgets. For employees requiring a new cap number, the sponsorship cost could increase by $103,265 per employee. Employers sponsoring multiple new H-1B workers each year could see a significant increase in their overall immigration budgets.

• Distinguish new cap hires from existing H-1B workers. Employers should not assume that the proposal affects all H-1B hiring equally. Hiring an H-1B worker who has already been counted against the cap may carry a very different cost under the proposed rule than sponsoring an employee seeking an H-1B cap number for the first time.

• Confirm cap status early in the recruiting and offer process. Before developing an immigration sponsorship strategy, employers should determine whether an H-1B candidate has previously been counted against the cap, how much H-1B time remains, and whether the contemplated petition could become cap-subject.

The Rule Is Still Only a Proposal

Employers are not currently required to pay the $103,265 fee. The rule remains at the Notice of Proposed Rulemaking (NPRM) stage and has not taken effect. The final fee amount, effective date, and scope of application may change before any final rule is issued. Employers therefore should not assume that all H-1B extensions or changes of employer will suddenly carry an additional $100,000 cost.

Companies planning to hire foreign talent through the H-1B cap may nevertheless want to begin reviewing their future sponsorship plans and distinguishing candidates who require a new cap number from H-1B workers who have already been counted against the cap.

ILS will continue to monitor the proposal closely and will provide timely updates regarding any Final Rule, effective date, or material changes to the scope of the proposed fee.

If you have questions about the proposed rule, H-1B cap-subject petitions, or how the proposal may affect your company’s H-1B hiring and immigration planning, please contact the ILS Immigration Team at immigrationlaw@consultils.com.

Disclaimer: This article is based on policy information available as of August 24, 2026. Given the rapidly evolving nature of U.S. immigration policy, employers should continue to monitor official updates and consult qualified immigration counsel for guidance based on their specific circumstances. ILS will continue to track developments and provide timely updates to our clients.

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As Partner and Head of Immigration at ILS, Anna advises global employers on all aspects of U.S. business immigration. She helps companies recruit and retain executives and highly skilled professionals essential to their U.S. operations, with experience spanning industries from autonomous driving and biotech, to entertainment, logistics, and manufacturing.

Previously, Anna practiced at leading global law firms and served as in-house counsel and compliance manager in the telecommunications, finance, and gaming industries. This diverse background equips her with practical, cross-industry insights that inform strategic, business-focused immigration solutions.

Email: contact@consultils.com | Phone: 626-344-8949