DHS Finalizes Rule to Replace H-1B Cap Lottery with Weighted System

By: Vandana Marath

Overview

On December 29, 2025, the U.S. Department of Homeland Security (DHS) will finalize a new rule that replaces the annual H-1B lottery system with a weighted H-1B Cap Selection system. The Federal Register has published an advance copy of the final rule, which remains unchanged from the proposed rule published in September 2025.  The rule is scheduled to take effect 60 days from the December 29, 2025 publication date and will be implemented for the Fiscal Year (FY) 2027 H-1B Cap registration process in March 2026.

Background

As a result of the final rule, positions would be classified into 4 wage levels (I-IV) based on Department of Labor’s (DOL) Occupational Employment and Wage Statistics (OEWS) wage data. Level IV, being the highest, would be entered into the selection pool 4 times; Level III, 3 times; level II, 2 times; and level I, once.

Employers must carefully match the wage level, occupational code, and work location across both registration and petition filings.  If the candidate is selected, the employer must ensure that the wage level provided in Form I-129 petition is accurate and appropriate for the job and matches what was provided during the registration.  USCIS may deny or even revoke a petition if it determines attempts to inflate or downgrade wage level to increase selection chances. If there is a possibility of a work location change, employer must ensure that documentation supports that the job offer was genuine at the time of registration.

The yearly cap will remain unchanged as it will still consist of 65,000 congressionally mandated H-1B visas plus 20,000 visas reserved for U.S. advanced degree holders.

Who is Affected

H-1B applicants and U.S. employers, especially those petitioning for workers in specialty occupations and industries like tech, engineering, and science. The new process will affect the probability of selection and may incentivize wage increases to improve selection odds. Employers hiring lower-paid H-1B workers will have lower selection likelihood under the weighted system compared with higher wage offers. 

Considerations

The rule is set to take effect February 27, 2026 for FY 2027 H-1B Cap season but it is possible that the regulation may be challenged in federal court. 

For any questions or assistance, please contact your trusted Chugh, LLP immigration professional.