Will H-1B Reforms Drive Salary Inflation in Tech and Engineering?

The 2025 changes being described as a “new H-1B rule” are already reshaping how employers price H-1B jobs: a $100,000 fee for new petitions filed after September 21, 2025, plus a weighted lottery that started January 17, 2025, both push employers toward higher-wage, higher-skill filings. For technology and engineering, that means salary pressure concentrates in mid-to-senior roles, while entry-level sponsorship becomes harder to justify and easier to replace with offshoring.

These shifts matter most for companies that file large volumes of H-1Bs in computer-related roles—where 54% of new H-1B hires sit—because the reforms raise the cost of each petition and change how cases get picked. The effects are uneven: cash-rich employers can absorb higher costs, while staffing and consulting firms built around lower-wage pipelines face the sharpest squeeze.

The 2025 H-1B changes driving pay pressure in tech and engineering

Several separate reforms and proposals are being discussed together as the “new H-1B rule.” They act through three levers: higher filing cost, selection preference for higher wages, and higher minimum wage requirements via legislation or wage-setting changes.

A new $100,000 fee for new H-1B petitions

A $100,000 fee for new petitions applies to filings after September 21, 2025. As of December 24, 2025, a federal judge had upheld that fee. The new charge replaces a prior fee picture described as under $10,000, which changes the economics of sponsorship quickly.

That price increase collides with the program’s wage profile. The median H-1B salary of $92,600, and only 10% earn more than $150,000. Put plainly: if a role pays near the median, the fee alone can exceed the annual wage gap between an H-1B hire and many domestic alternatives, turning “routine” sponsorship into an executive-level budget decision.

The pressure lands hardest on business models that rely on scale and thinner margins, including large IT services and consulting firms. Tata Consultancy Services and Infosys are cited as employers exposed because of lower-wage reliance, along with accounting and similar fields that have used H-1B at volume.

The weighted lottery, now tied to wage levels

A weighted lottery under a DHS final rule was implemented January 17, 2025, and later finalized in 2025. The mechanism prioritizes higher OEWS wage levels by entering those registrations multiple times in the selection pool, favoring higher-paid, higher-skilled positions.

In practice, the selection rule changes employer behavior before any salary offer changes. If a Level 1 wage filing has lower selection odds than Level 2+, employers either stop filing those cases or re-scope jobs so they fit higher wage levels. Both paths lift the wage profile of the cases that remain.

Over time, this reshapes the H-1B mix in tech and engineering: entry-level sponsorship becomes less common, while roles framed as advanced—cloud engineering, AI, robotics, semiconductor design, or other specialized work—take a larger share of the remaining slots.

Proposed wage floors in the H-1B and L-1 Visa Reform Act

Proposed legislation—the H-1B and L-1 Visa Reform Act, introduced September 29, 2025 and sponsored by Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL)—would change baseline salary math for many employers if enacted.

The bill would require H-1B pay to be the highest of:
– the local prevailing wage,
– the occupation median, or
– the DOL Level 2 median.

That “highest-of-three” approach is designed to limit entry-level use by making minimum pay track higher local benchmarks. Other proposed limits include a 50% cap on the H-1B/L-1 share of a workforce and added restrictions on third-party placement.

Sector examples illustrate how local markets matter: median tech salaries of $147K in Boston health tech and $105K in Denver aerospace. If wage floors pin to local medians or Level 2 medians, those numbers become compliance triggers, not just market context.

A DOL wage rule under OMB review

A DOL wage rule under OMB review would revise H-1B and PERM prevailing wages upward. If approved, that would lift minimum pay requirements directly by resetting the wage data employers must meet.

This is the most technical lever, but it reaches the same endpoint: higher minimum wages for sponsored roles across many common tech and engineering job families.

Why these changes can raise some salaries without raising all salaries

The reforms create targeted salary-inflation mechanics, but they do not force every employer to increase pay across an entire department. They operate more like a filter that reshapes which jobs get sponsored.

The fee is a blunt cost that wipes out low-margin filings

A $100,000 fee makes low-wage sponsorship hard to justify. When the median is $92,600, the fee becomes a second “salary” line item in year one. That pushes employers toward fewer filings, higher-paid roles, or non-U.S. hiring.

Offshoring examples show the substitution channel:
– LATAM seniors at 50% lower US salaries, with a cited $58K–$86K DevOps range.
– Eastern Europe AI engineers cited at $60K–$81K.

If an employer can get acceptable output at those offshore ranges, the fee encourages moving work rather than raising a U.S. salary. As a result, increases concentrate in roles that must stay in the U.S.—on-site systems, regulated environments, sensitive customer data, or tightly integrated product leadership.

The weighted lottery changes selection odds, so employers change job design

A weighted lottery tied to wage levels does not order employers to pay more; it changes their odds. Employers respond by shifting which roles they register and how they classify them.

That can cause wage “step-ups” for the sponsored slice of hiring even if the broader wage structure stays flat. A company can keep paying entry-level domestic hires at normal entry rates, while reserving H-1B filings for Level 2+ roles with higher pay bands.

Wage floors and wage data changes can harden pay requirements

Legislated wage floors and revised prevailing-wage systems do more than change odds—they change compliance. If the minimum becomes the highest of three benchmarks, the lower end of the pay distribution disappears for sponsored roles.

That raises wages for sponsored workers without raising wages for everyone else. Employers respond with narrower pipelines, fewer junior H-1B hires, and more domestic campus hiring where feasible.

Key takeaway: These changes function as a filter—raising costs and selection for sponsored hires and concentrating wage increases among roles that must remain onshore or are genuinely scarce.

Who feels the impact most in technology and engineering

The outcome is split: higher wages for select roles, but no broad wage inflation across all tech jobs.

Mid-to-high skill roles gain bargaining power inside the H-1B channel

Salary inflation is likely for select roles, with the median H-1B wage rising as firms target high-value positions. There’s a directional shift toward roles paying more than $150,000, especially in software and semiconductors and for workers with professional degrees.

Persistent shortages push pay where demand exceeds supply—AI, cloud, and robotics are named examples. Employers that truly need these skills in the U.S. will still sponsor and will treat the new costs as necessary to remain competitive.

Entry-level sponsorship becomes the pressure point

The combined effect of the weighted lottery and higher wage floors discourages entry-level use. Employers lose two previous advantages: predictable selection probability for low-wage filings and a cost structure that made high-volume sponsorship workable.

Likely results:
– fewer entry-level H-1B filings in computer and engineering occupations,
– greater reliance on domestic entry-level hiring and internships, and
– more overseas staffing for junior tasks.

IT services and third-party placement models face the sharpest disruption

IT services, consulting, and third-party placement are repeatedly flagged as exposed. When business models depend on placing workers at client sites, compliance and scrutiny costs rise, and bench-time economics worsen.

If clients must pay higher rates to cover increased wages plus a $100,000 fee, they will compare those costs to offshore delivery—often pushing routine engineering work out of the U.S. rather than lifting wages across the board.

What the numbers suggest about real market outcomes

Salary effects are framed as concentrated rather than universal, supported by wage and hiring data.

A median wage below the fee changes the sponsorship equation

A median H-1B salary of $92,600 means many roles sit under the new fee level. When a single upfront fee exceeds the annual pay of many global alternatives, employers triage.

Typical triage actions:
1. sponsor fewer workers,
2. sponsor only higher-paid specialists, and
3. shift remaining work offshore.

This explains why limited overall inflation is predicted even as specific sponsored roles rise.

Local salary differences get amplified

Medians like $91K Austin AI and $96K Atlanta commerce sit alongside higher medians in other markets. When wage floors or selection preferences tie to local wages, market gaps become compliance and selection gaps, not just budgeting differences.

Employers may move sponsored roles to higher-wage markets if that improves selection odds under the weighted lottery, even if payroll rises. That can concentrate H-1B hiring into fewer metro areas and push regional employers to offshore instead.

India is heavily exposed because of who uses the program

71% of Indian nationals are affected. India dominates many H-1B talent pipelines in software and IT services, so program-level changes land on Indian professionals and their employers first—especially in high-volume filing models.

Employer compliance and filing mechanics that matter under the 2025 changes

For practical guidance, the H-1B petition still runs through the same core filing instrument, even as fees and selection evolve.

The petition form and USCIS guidance

Employers file H-1B petitions using Form I-129, Petition for a Nonimmigrant Worker. The official form page is here: USCIS Form I-129.

USCIS also maintains the program’s main public guidance, including eligibility and employer obligations. A central starting point is: USCIS H-1B Specialty Occupations.

These references matter because when fees rise and selection tightens, more cases get reviewed aggressively on job duties, wage level alignment, and whether the role truly qualifies as a specialty occupation.

How employers re-price roles under a $100,000 fee

The economic logic points to a predictable shift: employers reserve H-1B sponsorship for roles where the total cost still makes business sense. In internal budgeting, the fee acts like a one-time premium that must be amortized over expected productivity.

This tends to favor:
– revenue-linked engineering roles,
– security and compliance-heavy roles,
– scarce deep-tech skills, and
– positions where onshore presence is a business requirement.

It disfavors large classes of junior roles that previously served as training ramps.

Broader labor-market implications for tech and engineering

The core point is not that “all salaries go up.” It is that the H-1B channel becomes more expensive and more biased toward higher wages, so employers reshape hiring patterns.

Big tech absorbs cost; startups feel the shock

Large employers like Amazon and Google can absorb costs, while startups are hit hardest—hiring can become 2–3x costlier for some roles. When startups cannot pass costs on to customers, they hire fewer people, shift hiring abroad, or delay projects.

This dynamic can reduce overall demand for U.S.-based engineers, even as it raises pay for the subset of roles that still justify sponsorship under the new economics.

Offshoring becomes the counterweight that limits overall wage inflation

Offshoring is the strongest brake. It supplies credible substitutes at the cited ranges—$58K–$86K for LATAM DevOps seniors and $60K–$81K for Eastern Europe AI engineers—while avoiding the new petition fee and selection risk.

Thus, reforms raise pay where work must stay onshore, but they also make it easier to justify moving standardized work offshore. That “push-pull” dynamic explains why wage increases look sharp in some job families but muted across the broader tech labor market.

A more top-heavy H-1B mix reshapes career paths

When entry-level H-1B filings fall and higher-wage filings rise, the career ladder changes. Employers may invest less in training foreign junior hires in the U.S. and more in hiring already-senior workers, whether onshore or offshore.

Consequences for early-career international graduates:
– reduced early-career mobility in the U.S.,
– increased movement to offshore-starts with later transfers, or
– greater reliance on domestic employment only if selection odds and wage levels fit the weighted lottery structure.

Timeline of the changes readers are asking about

The dates define which rules are already in play versus which remain proposals.

• January 17, 2025: The weighted lottery is implemented, later finalized in 2025.
• September 21, 2025: The $100,000 fee applies to new petitions filed after this date.
• September 29, 2025: The H-1B and L-1 Visa Reform Act is introduced by Senators Grassley and Durbin.
• December 24, 2025: A federal judge has upheld the $100,000 fee, keeping the cost structure in force.

In practice, selection and cost pressures hit before any proposed wage-floor bill becomes law. Employers already react by shifting to higher-paid roles and tightening which positions they will even attempt to sponsor.