DHS proposes $103,000 H-1B fee, raising concerns for small firms

The Department of Homeland Security announced a proposal to impose a $103,265 surcharge on top of existing H-1B filing fees. The agency estimates the fee would cause a “significant economic impact” for more than 11,000 small businesses, representing roughly three-quarters of the small firms it examined. The rule would be open for public comment for 30 days before it could take effect.

The department says the charge is intended to recover the federal government’s immigration-related costs, which it estimates at $8.8 billion annually. "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," Zach Kahler, a spokesperson for U.S. Citizenship and Immigration Services, said.

Economists warn the fee could have the opposite of its stated goal. Britta Glennon, an assistant professor at the Wharton School, noted that when large multinational firms lose access to H-1B workers they often shift hiring to foreign affiliates, effectively offshoring jobs. She added that startups lacking such alternatives may see reduced profitability, fewer patents and lower chances of acquisition or IPO.

Immigration attorney Elizabeth Ricci said the rule-making process gives the fee a higher chance of surviving legal challenges, but she questioned the agency’s calculations. "Either way, the country loses talent and jobs," she said, noting that if the fee deters employers, the expected revenue would not materialize.

Analysts also predict the fee could change the composition of H-1B beneficiaries, favoring senior-level employees at large corporations that can afford the cost, while entry-level positions and smaller firms may be squeezed out. Glennon warned that the shift could discourage international students from pursuing U.S. degrees, potentially affecting university enrollment and the broader talent pipeline.