As of 6 November 2026, USCIS says it cannot collect the $100,000 H-1B fee while a Massachusetts court’s vacatur stands, and the Department of Homeland Security says it “still plans to collect payment”. A presidential proclamation imposed the fee on 19 September 2025 for new H-1B petitions for workers outside the United States. Since then a federal judge in Massachusetts has vacated it as a tax only Congress can impose, a judge in Washington has upheld it, a second proclamation has renewed it to September 2027, and a court in California has thrown out the agencies’ policies for collecting it. Separately, DHS has proposed a new $103,265 fee on cap-subject petitions through formal rulemaking, which would be owed on top of the proclamation payment.
For a company planning engineering capacity for 2027, the fee matters less than the uncertainty around it. A hiring plan that depends on how the First Circuit rules is a plan with a coin flip in the middle.
I run delivery at Crimson Umbrella, so I spend a lot of time on the other side of this question: what it takes for a US company to get senior engineering done when the local route is expensive and unpredictable. What follows is the arithmetic I’d want in front of me, including the parts that do not flatter work done abroad.
Where the $100,000 H-1B fee stands in November 2026
The order of events matters, because each step changed who pays.
| Date | What happened |
|---|---|
| 19 September 2025 | Proclamation 10973 restricts entry “except for those aliens whose petitions are accompanied or supplemented by a payment of $100,000”, effective 21 September |
| 20 October 2025 | USCIS guidance, per Thompson Hine: the fee applies to first-time petitions for people outside the US; changes of status and extensions inside the US are exempt |
| December 2025 | A federal judge in Washington upholds the fee in the US Chamber of Commerce’s suit; the D.C. Circuit hears the appeal (No. 25-5473) on 9 March 2026 |
| 8 June 2026 | Judge Leo Sorokin in Massachusetts vacates the fee nationwide in a suit by 20 states, treating it as a tax only Congress can impose |
| 24 July 2026 | The First Circuit declines to stay the vacatur (No. 26-1699); merits briefing closed in October |
| 28 July 2026 | USCIS says it cannot require the payment while the order stands; DHS “still plans to collect payment”, per AILA |
| 25 August 2026 | DHS proposes a separate $103,265 fee on cap-subject petitions through formal rulemaking |
| 18 September 2026 | Proclamation 11069 extends the restriction to 21 September 2027, and Executive Order 14431 orders closer scrutiny of H-1B employers |
| 30 September 2026 | In Global Nurse Force v. Trump, a California court vacates the agencies’ implementing policies; the government appeals to the Ninth Circuit on 9 October |
At the D.C. Circuit argument, Judge Gregory Katsas put the question every one of these courts keeps circling: “The higher the extraction, the more this approximates a restriction.” No petition has reached the Supreme Court yet.
Congress could end the back and forth by statute, and has not. Senators Grassley and Durbin’s bipartisan H-1B and L-1 reform bill has had no committee action and lapses when this Congress ends on 3 January. Democrats take both chambers then, but immigration law still needs a presidential signature. Saurav has covered what else the new Congress can and cannot change.
The proposed $103,265 H-1B fee, and an enforcement drive
The August proposal is easy to misread as a fix for the proclamation. It is not. DHS’s own notice says the proposed fee “would be an additional fee separate from the $100,000 payment required by Proclamation 10973 and is based on different authority”. DHS divided the costs it says the programme imposes, about $8.78 billion, by the 85,000-petition annual cap and arrived at $103,265 per cap-subject petition, payable at filing on top of existing fees. Comments closed in late September 2026, and there is no final rule yet.
So the worst case for 2027 is two charges rather than one: the proclamation payment, if an appeals court reinstates it, and the new fee, if DHS finalises the rule.
Enforcement is rising alongside it. The Labor Department launched Project Firewall the same day as the original proclamation, letting the Secretary open H-1B investigations without a worker complaint; a DOL official has since told Bloomberg Law the H-1B caseload is up 48%. Mayer Brown reports roughly 200 investigations, an Inspector General inquiry into H-1B and PERM fraud announced in July, and PERM processing suspended for two technology companies in September. Executive Order 14431 adds a review of past labour condition applications and tells agencies to weigh an employer’s recent layoffs when deciding petitions.
The lottery and the wage floor moved too
A wage-weighted selection rule, in force from 27 February 2026, gives a registration between one and four entries in the lottery depending on the wage level offered. The FY2027 season was the first to run under it. Roughly 211,600 registrations were submitted, by the figures USCIS released in May, against 343,981 eligible registrations and 336,153 unique beneficiaries the year before, per Envoy. On either measure the pool shrank by more than a third. SHRM reports that 71.5% of FY2027 registrations were for people with advanced degrees, up from 57%, and only 17.7% were at wage Level I. The cap was reached on 17 July with no second lottery.
The Labor Department has also proposed raising prevailing wages at every level: Level I from the 17th percentile of local wages to the 34th, Level II from the 34th to the 52nd, Level III from the 50th to the 70th, and Level IV from the 67th to the 88th. Its own impact analysis puts the result at “approximately $14,000 per worker” a year. Software developers account for more than 32% of certified labour condition applications, so the change lands hardest on engineering. The rule is still a proposal, and the federal regulatory agenda lists no date for a final one.
Put together, the direction is plain even where the details are in court. The H-1B route is being priced toward senior, high-wage roles and away from the junior hires that used to be its volume.
What a US software engineer costs before any visa
Start with salary. The Bureau of Labor Statistics puts the May 2025 median annual wage for software developers at $135,980, and the mean at $148,100.
Salary is not cost. The BLS employer-cost survey for June 2026 found that in private industry “wages and salaries averaged $32.82 and accounted for 70.0 percent of employer costs”, with benefits making up the rest. Divide by 0.70 and the median developer costs an employer about $194,000 a year, the mean developer about $212,000. Those figures still leave out recruiting fees, equipment, office space and the management time a new hire absorbs.
| Median developer | Mean developer | |
|---|---|---|
| Salary, May 2025 | $135,980 | $148,100 |
| Fully loaded at a 70% wage share | ~$194,000 | ~$212,000 |
| First year, if a $100,000 fee applies | ~$294,000 | ~$312,000 |
The fee row applies only to a new petition for someone outside the US, and only if the courts reinstate the proclamation payment. If DHS finalises its separate $103,265 fee, a new cap-subject petition would carry that as well, taking the median developer’s first year to about $398,000. Treat both as the downside case. The first two rows are the floor whatever the courts decide.
The market is tilting the same way as the visa rules. Indeed’s software-development postings sat about 18% below their February 2020 level at the end of October, per the index Indeed publishes through the St. Louis Fed’s FRED database, and in the first quarter senior roles made up 69.3% of them, with entry-level roles at 4.5%, the lowest entry-level share of any occupation Indeed Hiring Lab tracks. Employers announced 171,501 technology job cuts through October, up 21% on the year, according to Challenger, Gray & Christmas, which counted AI as a stated reason in about a fifth of all US cuts. Even so, BLS projects software-developer employment to grow 10% between 2025 and 2035. Demand for senior engineers is not the constraint. Supply at a predictable price is.
Salary surveys put the gap between countries at several multiples: Stack Overflow’s 2026 survey has the median US back-end developer at $180,000 against $20,891 in India, on a small Indian sample. A rate card is still the wrong place to start, for the reasons below.
Section 174: the tax line most pitches for engineering abroad leave out
Engineering abroad is often sold on salary differences alone. The US tax code adds a line that changes the timing of the saving, and it is worth understanding before you sign anything.
The One Big Beautiful Bill Act, enacted on 4 July 2025, restored immediate expensing for domestic research. Section 174A allows “as a deduction any domestic research or experimental expenditures” for tax years beginning after 31 December 2024. Foreign research did not get the same treatment. Under section 174 it is still amortised “ratably over the 15-year period beginning with the midpoint of the taxable year”, as the IRS confirmed in Rev. Proc. 2025-28, which also gives small businesses retroactive relief.
Illustrated with round numbers: $100,000 of qualifying domestic research is deductible in year one, worth $21,000 at the 21% corporate rate. The same $100,000 spent abroad deducts one-fifteenth, halved for the midpoint convention, so about $3,333, worth roughly $700. The difference, around $20,300, is a timing cost rather than a permanent one, recovered over the following fifteen years, but it is real cash in the year you spend it.
Whether a contract counts as your research expenditure at all is an older question with older rules. Treasury Regulation 1.174-2 covers research a contractor carries out on your behalf, where the work is done “upon the taxpayer’s order and at his risk”. IRS Notice 2023-63 gives the two tests that matter for engineering abroad: who bears the financial risk under the contract, and where the work is done. On location it is explicit: “Taxpayers must look to where the SRE activities” are performed. Some development work falls outside section 174 altogether. Have your tax adviser read the contract before you model the saving, and be wary of any vendor who has not raised this with you first.
What time zones actually cost, measured
The research on distributed work says time zones cost more than distance. Studying 108 projects and 5,674 pairs of colleagues, Cummings, Espinosa and Pickering found that “temporal boundaries are more difficult to cross with communication technologies than spatial boundaries”. A 2024 study of 12,038 employees by Chauvin, Choudhury and Fang found that people shift their working hours to reach colleagues, and Rice Business’s summary of it puts the effect at 11% less synchronous communication for each extra hour of separation. At Lucent, Herbsleb and Mockus found distributed work items took about two and a half times as long as comparable co-located ones.
The same research says what helps. Keep the work that needs real-time collaboration inside shared hours, let well-specified work run across time zones, and write things down. Microsoft’s study of 61,182 employees found that remote work made collaboration more siloed unless teams built deliberate bridges between groups.
Kathmandu runs at UTC+5:45 with no daylight saving: 10 hours 45 minutes ahead of US Eastern in winter, 9 hours 45 minutes in summer. A nine-to-five day in both cities overlaps by exactly zero minutes. We wrote about what a 45-minute offset does to scheduling code; it does stranger things to meetings, which is why the overlap has to be designed rather than hoped for.
Where engineering abroad actually goes wrong
Time zones are one of four places it fails, and none of the four is fixed by a lower rate.
Contracts are the second. A US buyer wants a US counterparty, dollars, and an IP assignment that a US court will read the way the buyer does. A vendor abroad without a US entity leaves the buyer enforcing a contract in another country.
Seniority is the third. AI tools have made code cheap to write and expensive to check; we set out the evidence on that this week. A cheaper team of junior engineers produces more code for your senior people to review, which moves the cost rather than cutting it.
Continuity is the fourth. Rotating whoever is free onto your project means re-explaining your system every quarter. The person who scoped the work should still be there when it ships.
The visa alternatives have limits of their own. An L-1 transfer needs a year with an affiliate abroad within the previous three, under 8 CFR 214.2, which rules out new hires and companies without a foreign entity. An O-1 needs “sustained national or international acclaim” and does not scale to a team. Employer-of-record services make hiring abroad legal from about $599 per employee a month, but you still recruit, manage and keep the person yourself.
Why the work keeps moving anyway
The market data says companies are solving those problems rather than abandoning the model. India’s global capability centres, the in-house engineering hubs foreign companies run there, reached 2,117 centres and about 2.36 million people according to the Nasscom–Zinnov report released in May 2026, with revenue estimated at $98.4 billion for FY2026, up from $64.6 billion in FY2024. Gartner forecasts worldwide IT spending of $6.37 trillion in 2026, with IT services at $1.57 trillion.
Nepal is a smaller part of the same shift, and harder to measure. The president of NAS-IT, Nepal’s software and IT services industry association, gave the Kathmandu Post a best estimate that IT service exports passed about $1 billion in 2025. Official figures are far lower, Rs 22.33 billion for 2024/25 by the central bank’s count, the Post reported, because much of the income arrives through foreign platforms and is recorded as remittance. A World Bank project document puts exports above $500 million with about 100,000 people in digital industries.
Policy has followed. The 2024/25 budget declared a decade of IT with a target of NPR 3 trillion in IT service exports and 1.5 million jobs. The 2025/26 budget gave IT exporters a 75% income-tax waiver, and the 2026/27 budget set it at a 50% rebate.
How we set it up
Each of the four failures above is a design decision, so here is how we made ours.
You contract with our New York corporation and pay in dollars. Your code, data and designs transfer to you on final payment. A named senior lead owns the engagement from scoping to delivery and does not change after you sign; how we work sets the terms out in full.
We work Sunday to Friday, 08:00 to 23:00 Kathmandu time, across shifts. That puts the real-time work, design reviews, pairing and decisions, inside the overlap the research says to protect, and leaves well-specified work to run while you sleep.
| Your time zone, winter | 23:00 in Kathmandu is | Live overlap with your 9-to-5 |
|---|---|---|
| US Eastern | 12:15 | 3 hours 15 minutes |
| US Central | 11:15 | 2 hours 15 minutes |
| US Pacific | 09:15 | 15 minutes |
East Coast teams get a working morning together. West Coast teams get a different rhythm: you leave the day’s questions at the end of your afternoon, and the answers, or the pull request, are there when you start. Done well, a written handoff is also a written record of every decision.
Rates sit on our services pages, and the people behind them are on the about page. If your 2027 engineering plan currently depends on how a court rules on a visa fee, talk to us before it has to.
Questions buyers ask
Is the $100,000 H-1B fee being charged right now?
No. As of 6 November 2026 the $100,000 H-1B fee is not being charged: Judge Leo Sorokin in Massachusetts vacated it nationwide on 8 June 2026, and USCIS said in July it cannot require the payment while that order stands. DHS has separately proposed a $103,265 fee on cap-subject petitions, which would be owed on top of it, and appeals are pending in three circuits, so check the current position before you file anything.
Does the fee apply to extensions or changes of status?
Under USCIS’s October 2025 guidance, no: the fee applied to first-time petitions for people outside the US, and changes of status and extensions inside the US were exempt. The proposed $103,265 fee is a separate charge and broader, covering cap-subject petitions generally.
What does a US software engineer cost an employer?
About $194,000 a year at the median and $212,000 at the mean. The figures divide the Bureau of Labor Statistics’ May 2025 software-developer salaries, $135,980 median and $148,100 mean, by the 70.0% wage share in its June 2026 employer-cost survey, and still leave out recruiting, equipment and office space. If the $100,000 H-1B fee applies, the first year rises to about $294,000 and $312,000.
Can we deduct software development done abroad in the first year?
Usually not in full. Research performed outside the US is amortised over 15 years under section 174, while domestic research is deductible at once under section 174A. Whether a given contract counts as your research depends on who bears the financial risk, so ask a tax adviser.
How much working overlap does Kathmandu have with the US?
With shifts running to 23:00 Kathmandu time, about three and a quarter hours with a US Eastern working day in winter and four and a quarter in summer, two and a quarter with Central, and almost none with Pacific, where work runs as a written overnight handoff.
Rujen Shakya is head of project management and a senior mobile engineer at Crimson Umbrella Technologies. You can find Rujen on LinkedIn.