H-1B changes in 2026 + will there be a second lottery for FY2027?

What actually changed

Two separate things happened within six months of each other. First, a $100,000 supplemental fee was introduced on new H-1B petitions, effective September 21, 2025, per a Presidential Proclamation implemented by USCIS. It never applied to people already holding a valid H-1B, but it did apply to first-time petitions, including the annual cap lottery. It is not being collected today - a court vacated it in June 2026, as set out below.

The part most coverage buries: the fee applies to newpetitions for candidates outside the US - it does not apply to a change-of-status petition filed for someone already here, including an F-1 student converting to H-1B straight off OPT or STEM OPT, as long as they're otherwise eligible for the change of status. For an Indian student who stays in the US through the H-1B filing, the $100,000 fee is not the number that decides whether an employer sponsors you.

That said, treat the fee itself as contested, not settled: a federal district court (D. Mass.) vacated the fee policy on June 8, 2026, and the First Circuit Court of Appeals declined to stay that ruling on July 24, 2026, so DHS says it is complying while the government's appeal continues. As of this review the $100,000 payment is not being collected - but the appeal isn't decided, and if it's reinstated, both the fee and the change-of-status exemption above go back into effect.

Second, starting with the FY2027 cap season (registration opened spring 2026, rule effective February 27, 2026), the H-1B lottery stopped being purely random. Registration has been "beneficiary-centric" since FY2025 - each individual candidate gets exactly one entry into the pool no matter how many employers submit a registration for them. What changed is how many entries that one candidate gets: USCIS now weights entries by the offered role's Department of Labor wage level. Level I (entry-level) registrants get 1 lottery entry, Level II gets 2, Level III gets 3, Level IV (senior/highly experienced) gets 4. More entries means a meaningfully better chance of selection.

Sources: $100,000 supplemental fee - Presidential Proclamation of Sep 19, 2025, implemented by USCIS, effective Sep 21, 2025. Change-of-status exemption - USCIS guidance clarifying Proclamation implementation, Oct 21, 2025. Litigation status - U.S. District Court for the District of Massachusetts order vacating the fee policy, June 8, 2026; First Circuit Court of Appeals order denying a stay pending appeal, July 24, 2026; checked August 2, 2026 (appeal ongoing - verify current status before relying on this). Weighted selection and the beneficiary-centric registration framework it builds on - DHS/USCIS final rule "Weighted Selection Process for Registrants and Petitioners Seeking To File Cap-Subject H-1B Petitions", Federal Register, published Dec 29, 2025 (doc. 2025-23853), effective Feb 27, 2026.

Why this hits fresh graduates hardest

Almost every international student's first US job offer out of a master's program is classified as Level I or Level II - that's simply what "entry-level" means on the Department of Labor's wage scale, regardless of how selective the university was. Under the new weighted system, DHS's own projections put Level I selection odds at roughly 15%, versus roughly 61% for Level IV. The $100,000 fee compounds this when it's in force (see the litigation note above): smaller and mid-size employers - who previously hired plenty of new grads - are now more reluctant to sponsor at all, since the fee applies whether or not the hire is ultimately selected in the lottery. In FY2025, for the first time, the top four H-1B petitioners were all large US tech companies (Amazon, Meta, Microsoft, Google) - sponsorship is concentrating among a smaller number of well-resourced employers.

To be precise about what we could and couldn't verify: we found no public data connecting H-1B sponsorship odds to university prestige or selectivity specifically. The risk here is about wage level and employer size, not which of your target schools is more "famous" - a CMU graduate and a lesser-known-program graduate with the same entry-level offer face the same structural odds under this system.

Sources: projected selection rates by wage level (roughly 61% / 46% / 31% / 15% for Levels IV-I) - DHS estimates in the weighted-selection final rule, Federal Register, Dec 29, 2025; summarised by Seyfarth Shaw and Fisher Phillips client alerts (Dec 2025). These are DHS's own projections based on historical registration distributions, not observed FY2027 results - actual rates will not be known until USCIS publishes cap-season data. FY2025 top-four petitioners for initial employment (Amazon, Meta, Microsoft, Google) - National Foundation for American Policy analysis of the USCIS H-1B Employer Data Hub, Nov 17, 2025.

The genuine silver lining: the master's cap

This part hasn't changed and is worth knowing: master's degree holders from US institutions get a separate pool of lottery entries in addition to the regular cap, giving roughly a 46% cumulative chance of selection across both pools, versus about 26% for bachelor's-only applicants. An MS from a US university is still a real, quantifiable advantage over not having one - it's specifically the entry-level wage classification that's gotten harder, not the value of the degree itself.

Sources: the advanced-degree exemption (20,000 places on top of the 65,000 regular cap) is statutory - INA §214(g)(5)(C). The roughly 46% vs 26% cumulative figures are widely cited estimates derived from registration volumes under the OLD purely random lottery, not official USCIS publications; under the weighted process effective Feb 27, 2026 the master's advantage still applies, but the absolute odds for an entry-level (Level I) offer are lower than these numbers imply. Treat them as a directional comparison between degree levels, not a forecast of your own FY2027 odds.

Will there be a second lottery for FY2027?

As of mid-July 2026, USCIS has not announced a second selection round for FY2027 - and it may never happen. Here's how it actually works: a second lottery only occurs if the petitions actually filed by selected registrants (the April-June filing window closed June 30, 2026) fall short of the 85,000-visa cap. USCIS typically makes that call between late July and September. For history: FY2024 and FY2025 both had second rounds; FY2026 did not.

This year's wildcard is the $100,000 fee itself - if it deterred enough employers from filing petitions for candidates they'd already registered, the odds of a second round go up. That's a plausible mechanism, not a prediction. Our honest advice: do not build your plans on a second lottery. If you weren't selected, plan around your remaining OPT/STEM OPT time and treat any second draw as a bonus. We'll update this section when USCIS decides either way.

Status as of July 16, 2026, per USCIS announcements and immigration-counsel analyses of the FY2027 cap season. Historical second-round record: uscis.gov cap-season updates for FY2024, FY2025, and FY2026.

What this means for your decision

This isn't a reason to rule out the US - STEM OPT still gives you up to 3 years of work authorization no matter what happens with H-1B, and that's unaffected by any of this. But it's a reason to go in with realistic expectations about what happens after OPT: your odds of converting to long-term status improve if you land a role at a larger, well-resourced employer (more likely to absorb the $100k fee, if it's reinstated on appeal) or in a higher-paying specialization (higher wage level means more lottery entries). It's also a reason to seriously weigh Canada or Germany in your comparison if long-term settlement matters more to you than which country you start in - both currently offer clearer, less lottery-dependent pathways from post-study work status to permanent residence.