H‑1B Lottery Ends: Wage‑Based Selection to Favor Highest Salaries

The White House has approved a sweeping change to the H-1B program that will replace the current visa lottery with a wage-based selection system, moving the United States away from chance and toward salary-driven rankings. The Office of Information and Regulatory Affairs signed off on the proposal on August 8, 2025, and the rule received formal approval from the White House on August 14, 2025, under President Biden.

The Department of Homeland Security (DHS) will next publish the rule for public comment, with implementation targeted for the Fiscal Year 2027 cap season, meaning registration could open as early as March 2026. The annual cap remains 85,000 H-1B visas (65,000 regular and 20,000 for U.S. advanced degree holders).

Policy changes — overview

Under the proposed rule, H-1B selections will no longer rely on a random draw when registrations exceed the cap. Instead:

• U.S. Citizenship and Immigration Services (USCIS) will rank registrations by the wage offered.
• Employers that commit to higher pay will rise to the front of the line.
• The Department of Labor’s four prevailing wage levels — Level I (entry) through Level IV (most experienced) — will guide this ranking.
• Employers must declare the wage level at the time of registration.
• If a single wage tier has more registrations than available slots, a limited lottery will run within that tier only to break ties.

Officials say the change aims to protect U.S. workers and refocus the program on higher-skilled, higher-paid roles. The rule signals a strong policy shift: wage signals — rather than luck — will drive H-1B access. While wages lead the selection, the proposal leaves room for future consideration of an applicant’s experience and skills during final vetting.

Next regulatory steps:

1. DHS will publish the full text in the Federal Register.
2. A 30- to 60-day public comment period will open.
3. DHS will review feedback and issue a final rule.
4. If not slowed by legal challenges, the wage-based system would debut for FY2027, with registration likely in March 2026.

How selection will work

The mechanics are straightforward:

1. Employers submit registrations that list the offered salary and the matching DOL wage level for the job and location.
2. USCIS allocates H-1B slots from the top down: Level IV → Level III → Level II → Level I, until the cap is met.
3. If a single level produces more cases than slots, a small lottery runs within that level only.

Key modeling and competitiveness insights:

• Early analyses (VisaVerge.com) suggest offers in the $130,000–$150,000 range or higher may be needed to remain competitive in many tech roles, especially in major hubs.
• Modeling for software roles indicates selection concentrated around the top end of U.S. wages for the occupation.
• This marks a sharp break from the current lottery, where a new graduate earning an entry-level salary could be selected by chance.

The proposal preserves the existing cap structure: 65,000 under the regular cap and 20,000 for U.S. advanced degree holders. However, the wage ranking applies across these categories, boosting candidates with higher salaries regardless of where they work, so long as the employer is subject to the cap.

Impact on applicants and employers

Winners and losers:

• Likely beneficiaries:
  • Large, well-funded companies that can offer top-of-market pay.
  • Senior professionals commanding higher salaries.
• At-risk groups:
  • Entry-level international workers and F-1 students moving from OPT or STEM OPT into H-1B jobs, especially at startups or lower-paying sectors.
  • Small businesses and academic institutions that cannot meet top wage levels.
  • Candidates in fields with lower starting pay (arts, social sciences, education).

Example scenario:
– A recent international graduate with a master’s in data analytics receives a $90,000 offer from a mid-sized firm in a smaller city.
– Under the current lottery, this candidate has the same chance as a higher-paid peer.
– Under the new rule, that offer would likely map to Level I or Level II, placing the registration near the back of the queue.
– The student may need to seek a higher-paying offer, pivot to another visa classification, or consider other countries with different selection systems.

Employer responses and consequences:

• Many employers may feel pressure to raise salaries, which could spark wage inflation in some roles.
• Others might restructure teams, shift work abroad, or pursue different visa pathways.
• Universities and student advisors are already warning the F-1 to H-1B pipeline is at risk; some recommend exploring alternatives such as:
  • O-1 (individuals with extraordinary ability)
  • L-1 (intracompany transferees), where applicable

Procedural requirements (unchanged)

Selection mechanics do not alter core filing requirements:

• Employers still must obtain a certified Labor Condition Application (LCA) on form ETA-9035/9035E before filing the H-1B petition; the form is available at the DOL site: https://www.dol.gov/agencies/eta/foreign-labor/forms/eta-9035-9035e
• After selection, employers file the H-1B petition with USCIS using Form I-129, Petition for a Nonimmigrant Worker: https://www.uscis.gov/i-129
• The wage-based rule does not waive these steps or the requirement to pay at least the prevailing wage.

Arguments for and against

Supporters:

• Argue the move better aligns the program with labor market demand.
• Claim targeting higher-paid roles will raise the economic value of H-1B admissions.

Critics:

• Warn the change favors wealthier employers, widening inequities.
• Say it weakens the pipeline from U.S. universities to high-demand jobs, especially in STEM.
• Point to possible regional imbalances — smaller cities and lower-wage sectors could lose ground in recruiting international talent.

Legal risks:

• Universities, advocacy groups, and business coalitions are preparing legal challenges that could delay or reshape the final rule.
• DHS can still revise the text after the comment period.

Key takeaway: Employers and applicants should prepare for a 2026 registration that may look very different from the past H-1B lottery. Watch for the DHS publication and comment window to understand—and respond to—the final details.

Practical next steps and recommendations

For employers:

• Benchmark offers against the DOL wage levels for each location and occupation.
• Plan budgets to accommodate higher wages where needed.
• Coordinate hiring teams earlier to lock in stronger pay packages before registration opens.
• Consider alternative staffing strategies (outsourcing, remote hires, other visa routes).

For international students and applicants:

• Speak with campus advisors about timing, alternative categories, and backup plans.
• Explore O-1, L-1, or other visa classifications if salary targets prove out of reach.

For all stakeholders:

• Monitor DHS publication in the Federal Register and participate in the 30–60 day comment period.
• Prepare to respond to the final rule and any ensuing legal developments.

For official updates and cap-season guidance, consult the USCIS H-1B page: https://www.uscis.gov/working-in-the-united-states/temporary-workers/h-1b-specialty-occupations.