On December 23, 2025, the U.S. Department of Homeland Security (DHS) issued a Final Rule to amend the process by which the government issues H-1B visas to petitioners subject to the H-1B cap.
Each year, the government allocates 65,000 H-1B visas, plus an additional 20,000 visas for persons holding advanced degrees. These are referred to as “cap-subject petitions” and are the type of H-1B visas sought by most private sector employers. In contrast, H-1B visas sought by institutions of higher education, nonprofit organizations affiliated with such educational institutions, and nonprofit research organizations and governmental research entities are not subject to the numerical limitation on the number of H-1Bs issued each year.
Under the prior rule, employers first submitted an online registration for each candidate during a designated window that closed annually on April 1. Each registration included basic details and required payment of $10. The U.S. Citizenship and Immigration Services (USCIS) would then conduct a lottery due to the number of registrations far exceeding the number of capped visas. Only employers who “won” the lottery were permitted to file a full H‑1B petition, which normally would be effective October 1 of the same year. By way of example, in fiscal year 2026, there were approximately 339,000 applications submitted into the lottery, which meant employers had about a 30% of winning the right to submit a full application.
The new rule does away with the random lottery process and implements a weighted selection process that will favor allocating H-1B visas to higher-skilled and higher-paid individuals, while maintaining the opportunity for employers to secure H-1B workers at all wage levels.
To summarize what is a fairly complicated process, applicants registered for the H-1B cap lottery will be entered into pool, using a weighted system. The weight granted is based on the salary offered to the H-1B beneficiary, in accordance with the U.S. Department of Labor’s (DOL) Occupational Employment and Wage Statistics (OEWS) Wage Levels. Beneficiaries whose offered wage corresponds to Level 4 (the highest tier) of the DOL’s four-level wage structure will be entered into the selection pool four times. A Level 3 beneficiary will be entered three times; a Level 2 beneficiary, two times; and a Level 1 beneficiary, once.
As stated in the Notice published in the Federal Register
“The purpose of this rule is to allow DHS to implement the numerical cap in a way that incentivizes employers to offer higher wages, or to petition for positions requiring higher skills and higher-skilled aliens, that are commensurate with higher wage levels. This weighted selection process will generally favor the allocation of H-1B visas to higher-skilled and higher-paid aliens, while maintaining the opportunity for employers to secure H-1B workers at all wage levels, to better serve the congressional intent for the H-1B program. Moreover, it will disincentivize abuse of the H-1B program to fill relatively lower-paid, lower-skilled positions, which is a significant problem under the present H-1B program.”
This Final Rule is effective February 27, 2026, and will be in place for the FY 2027 H-1B cap registration season. This Rule comes on the heels of President Trump’s September 2025 executive order, which required a $100,000 application fee for all H-1B visas. That fee was subject to legal challenges, but on December 23, 2025, U.S. District Judge Beryl Howell upheld its legality, ruling that it falls within presidential authority under immigration statutes. Employers can expect that the challenging groups will take an appeal of that decision.
The specter of a $100,000 application fee, coupled with a new allocation process favoring more highly compensated beneficiaries, will cause employers to rethink their H-1B visa utilization strategy. Of course, there are alternatives to H-1B visas that employers should also consider, such as O, TN, and several types of EB visas.
Coupled with the travel bans imposed by President Trump preventing the entry of any persons from twenty different countries and the various revocations of Temporary Protected Status and work authorizations, employers need to pay close attention to developments through the new year.
