DC Circuit Questions Trump Administration’s $100,000 H-1B Entry Fee as Tax

(UNITED STATES) — The U.S. Court of Appeals for the D.C. Circuit questioned whether President Trump’s $100,000 H-1B entry fee amounts to an unconstitutional tax and whether the administration sidestepped the standard process USCIS uses to change immigration fees.

Judges focused on the September 19, 2025, Presidential Proclamation that created the one-time charge for certain new H-1B petitions, probing whether it bypasses Congress’s Article I authority to levy taxes and whether it improperly avoided public notice-and-comment rulemaking.

The dispute matters for U.S. employers that hire high-skilled workers abroad under the H-1B program, because the fee attaches at the start of some overseas onboarding and can change whether companies proceed with hires, delay start dates, or redirect candidates to other options.

President Trump announced the fee by proclamation on September 19, 2025, and set it to take effect on September 21, 2025, as part of an effort the administration described as curbing program abuse and prioritizing U.S. workers.

Rather than applying across all H-1B activity, the administration framed the fee as a prospective gatekeeping measure tied to a subset of new petitions, leaving many existing H-1B workers and routine filings outside its scope.

That structure, however, created immediate uncertainty for employers planning to bring new hires from abroad into the United States, because companies often finalize budgets and start dates months in advance and typically rely on predictable USCIS fee schedules.

USCIS addressed some of that uncertainty in guidance dated October 21, 2025, explaining who pays, how payment works, and which filings trigger the charge.

Under that USCIS guidance, employers—not workers—pay the one-time fee, and the agency instructed petitioners to make the payment through pay.gov.

USCIS tied the fee to petitions for beneficiaries abroad who do not have current H-1B status when the employer requests consular notification, port-of-entry notification, or pre-flight inspection.

The guidance also reached situations that begin as U.S.-based filings but end with overseas processing, including cases where USCIS rejects a change-of-status or extension request and visa processing abroad becomes necessary, such as after a status lapse or a departure.

USCIS and the administration also described a set of exemptions meant to narrow the fee’s reach, including grandfathering for petitions filed before September 21, 2025.

Another exemption covers beneficiaries already in valid H-1B status or those with approved change-of-status or extensions, even if they later travel abroad for visa stamping.

USCIS also excluded several common categories of H-1B activity from the fee, including extensions, amendments, and change-of-employer petitions, as well as cap-exempt filings and H-4 dependents.

For employers seeking relief outside those carve-outs, USCIS described national interest waivers available by email through [email protected], requiring proof that no U.S. worker is available and that the beneficiary poses no security threat.

The legal challenges to the proclamation arrived quickly, led by business and sector groups that argue the White House exceeded its authority by imposing what they describe as a fee that functions like a tax or tariff tied to labor brought into the country.

The U.S. Chamber of Commerce filed the first lawsuit earlier in 2025, and a coalition of health care groups and labor unions followed with a second challenge in October 2025.

Those suits argue the measure exceeds executive authority, operates as an illegal tax or tariff on labor importation, and disrupts hiring without going through the notice-and-comment rulemaking that typically accompanies USCIS fee changes.

The D.C. Circuit’s questioning signaled attention to those constitutional and administrative-law fault lines, including whether the proclamation crossed from immigration administration into taxation and whether the approach improperly bypassed the formal process that usually applies when USCIS changes fees.

As of March 2026, the practical effects show up most sharply in planning for the next cap season, because the fee applies prospectively and first affects FY2027 cap registrations tied to the March 2026 lottery cycle.

That timing concentrates employer attention on new overseas hires, since many employers use cap season to convert candidates into H-1B status and then coordinate consular processing for workers who are outside the United States.

At the same time, the framework described by USCIS generally spares existing H-1B holders, renewals, and most U.S.-based changes, reducing the number of workers who face the charge in day-to-day compliance.

One example the guidance highlights is the large share of cap recipients who move from student status inside the United States; the material said that an F-1 to H-1B pathway accounts for ~75% of recipients from U.S. universities.

Even when employers conclude a case falls within the charge, the cost cannot simply be shifted to the worker, because employers cannot pass it to workers without violating DOL wage rules.

The material also described the fee as generally tax-deductible, a detail that affects how some companies may account for the expense but does not eliminate the immediate cash impact of a single, high-cost payment tied to a specific filing.

With litigation continuing and no updates confirming a resolution, employers weighing new hires abroad have had to plan against the risk that the fee remains in place through upcoming cap cycles and consular processing timelines.

Court outcomes could range from a constitutional ruling that limits the executive branch’s ability to impose a charge that operates like a tax, to an administrative-procedure ruling that forces a return to notice-and-comment rulemaking, or revisions to how and when the fee applies as agencies refine implementation.

Until courts provide clearer direction, the proclamation and USCIS guidance leave employers and workers abroad facing a high-stakes calculation at the front end of hiring, with the $100,000 H-1B entry fee looming over decisions that once turned mainly on headcount needs and processing timelines.