What to know about changes to the H-1B visa program

The H-1B system is the primary pathway for foreign professionals to enter the country, and is also used by international students who hope to remain in the U.S. after their student visas expire. A favorite of large tech companies, the visas are also used broadly by foreign doctors and university researchers.

Here’s what you need to know about recent changes to the program.

How does the H-1B visa work?

Since its creation in 1990, the H-1B has been available to foreign professionals with a college degree and a valid job offer in the United States. It lasts for three years and can be renewed one time. Visa holders are also eligible to apply for green cards, but they must have an employer or family member willing to sponsor them.

Companies have typically paid between $5,000 to $10,000 in government fees for each visa holder, excluding the cost of the legal work to prepare the application.

What has changed?

Under Trump’s new policy, visa holders—or the companies sponsoring them—must pay a $100,000 fee to enter the country and start working. Commerce Secretary Howard Lutnick, who announced the changes on Friday from the White House, initially said this fee would be annual, adding to confusion around the rollout.

The changes will take effect for foreigners looking to apply for H-1B visas in the coming lottery cycle, which will begin in March 2026. People on that cycle typically start work the following October.

The new fee doesn’t apply to existing visa holders looking to renew their visas, according to a tweet from White House press secretary Karoline Leavitt.

The proclamation is likely to face legal hurdles, said New York-based business immigration attorney Karin Wolman. The government is typically authorized to collect fees for immigration benefits such as visas at levels that recoup its costs—and it would be difficult to argue that $100,000 is necessary, Wolman said. She also said the government imposed the fee without a required public notice and comment period.

What sparked the confusion this weekend?

When Trump announced the program on Friday, it wasn’t immediately clear if it would apply to existing H-1B visa holders.

Lutnick appeared to suggest it could. “Renewals, first-times, the company needs to decide…Is the person valuable enough to have a $100,000 a year payment to the government?" he said, standing beside the president in the Oval Office.

Adding to the confusion, the White House used its travel-ban authority to enact the changes and said the new policy would take effect almost immediately, meaning any current visa holders overseas could legally be refused admission back into the country without paying a fee. The proclamation it released didn’t specify that the fee would only apply to new visa applicants, meaning the administration could still decide to apply it to renewals as well.

The confusion sparked panic among major tech companies, including Microsoft and Amazon, who raced to bring their employees into the country before the fee kicked in at 12:01 a.m. on Sunday. Companies with large numbers of H-1B visa holders feared massive payments, without any clear process to pay them.

“It was horrendous," said Wolman, the immigration attorney. “I had colleagues who were up until midnight dealing with clients stuck abroad, trying to rearrange their flights."

Are there any exceptions?

According to the White House proclamation, the fee won’t apply if Homeland Security Secretary Kristi Noem determines that an H-1B applicant’s hiring “is in the national interest and does not pose a threat to the security or welfare of the United States." Those exemptions are available to individuals, companies and entire industries.

So far, no criteria has been spelled out for what qualifies as a national-interest exemption.

Why is the H-1B program so controversial?

Congress has set the number of visas awarded annually at 85,000, though nonprofit organizations involved with scientific research aren’t subject to that cap. For at least the last decade, there have been far more applicants than there are visas available, and the government runs a lottery to decide who should receive one.

Trump has said companies use the system to avoid hiring American workers who might demand higher salaries.

There are roughly 700,000 people currently living in the country on H-1Bs, according to a National Foundation for American Policy analysis of government data, though a significant proportion of those have already applied for green cards and are now waiting in a yearslong backlog.

For years, critics have wanted to overhaul the program. Republicans and Democrats alike have advocated, for example, raising the minimum wage visa holders must be paid, or abolishing the lottery in favor of some kind of merit system.

Several anti-immigrant groups, whose ranks now populate immigration policy positions across the Trump administration, have advocated getting rid of the program entirely.

Why did Trump make these changes?

The president argued the new fee is necessary to make the visa program less attractive to U.S. companies who want to pay workers less and to motivate them only to turn to the program for rare, top talent.

Administration officials, including Lutnick, have explicitly said they hoped the change would also reduce the overall number of immigrants coming to America for work.

But the effects of Trump’s changes likely won’t be known for several years. The policy could disrupt several prominent business models that have sprung up in response to the creation of the H-1B visa, such as information-technology companies primarily staffed by Indian visa holders that have made it cheaper for businesses to outsource their IT departments. Those jobs, specifically cited by the White House proclamation, are the likeliest candidates to go to U.S. workers instead.

Many big companies may opt to move more of their operations overseas, to countries like Canada or those in Europe.

The policy could be toughest on institutions that rely on so-called cap-exempt H-1B visas, such as rural hospitals that can’t recruit enough doctors to live in undesirable areas.

How are businesses reacting?

Many major U.S. companies that use the program reacted in shock to the changes and were still scrambling on Monday to make out the full implications. Several are contemplating joining lawsuits against the policy, though building a case will prove tough given the Supreme Court’s recent ruling limiting judges’ authority to block policies nationwide.

Several prominent business leaders have voiced cautious support for the idea, hoping it would eliminate competition for the highly coveted visas.

Executives in highly valued industries, such as artificial intelligence and defense, also quietly hoped they would become eligible for an industrywide exemption, according to people familiar with their thinking.

Netflix co-founder Reed Hastings called the fee “a great solution."

“It will mean H1-B is used just for very high value jobs, which will mean no lottery needed, and more certainty for those jobs," Hastings said in a social-media post.

This explanatory article may be updated periodically.

Write to Michelle Hackman at michelle.hackman@wsj.com and Victoria Albert at victoria.albert@wsj.com