A federal appeals court handed the Trump administration a setback on its signature H-1B visa overhaul, declining to revive a $100,000 fee that a lower court judge struck down as an unlawful tax Congress never authorized.
A three-judge panel of the Boston-based 1st U.S. Circuit Court of Appeals ruled Friday that the administration failed to demonstrate it was likely to succeed on appeal in proving it had not exceeded its authority by imposing the fee. The decision keeps in place a June 8 injunction that blocked the fee, a measure President Trump imposed by proclamation last September to reshape how American employers hire foreign workers through the H-1B program.
The ruling marks the second consecutive loss for the administration in its effort to defend the fee, which would have represented a staggering increase over the $2,000 to $5,000 that employers previously paid to sponsor an H-1B worker. Twenty Democratic state attorneys general sued to block the proclamation, and so far the courts have sided with them at every turn.
The lower court ruling that started the legal fight came from U.S. District Judge Leo Sorokin, an Obama appointee, who found that the $100,000 fee amounted to an unconstitutional tax. Only Congress holds the power to levy taxes under the Constitution, Sorokin reasoned, and no act of Congress authorized a fee of this size on visa applicants. His June 8 order vacated the policy entirely.
Sorokin acknowledged executive power over immigration but drew a firm line. In his ruling, the judge wrote:
"While the Executive has broad discretion over the admission and exclusion of aliens, that discretion is not boundless."
That framing, treating the fee as a tax rather than a lawful exercise of presidential authority, became the central question on appeal. The administration argued it had clear legal ground. White House spokesperson Taylor Rogers pushed back on the lower court decision:
"President Trump has clear legal authority to restrict entry of any class of aliens he determines is not in America's best interests."
The 1st Circuit panel was not persuaded. All three judges on the panel were appointees of Democratic presidents, and they concluded that the administration had not shown a likelihood of prevailing on the merits, the standard threshold for freezing a lower court order while an appeal moves forward.
Even before the courts intervened, the $100,000 price tag appeared to have a chilling effect. Few employers paid the fee in the months it was in effect, a sign that the cost was steep enough to discourage companies from pursuing new H-1B hires altogether.
That outcome aligned with the proclamation's stated purpose. Trump, in imposing the fee, argued that the H-1B program "has been deliberately exploited to replace, rather than supplement, American workers with lower-paid, lower-skilled labor." The $100,000 charge was designed to force employers to think twice before reaching overseas for talent that could be found domestically.
The H-1B program issues roughly 65,000 visas each year, with an additional 20,000 reserved for workers holding advanced degrees. The visas are valid for three to six years. Tech companies rely heavily on the program to bring in foreign workers, and the administration's fee was widely understood as a direct challenge to that hiring model. A separate Trump administration probe into H-1B visa fraud, launched under Vice President Vance's oversight, has targeted abuse of the program from a different angle.
Before the proclamation, sponsoring an H-1B worker cost employers between $2,000 and $5,000, depending on the size of the company and other factors. The jump to $100,000 represented a potential increase of roughly 5,000 percent, a figure the coalition of attorneys general seized on as evidence the fee was punitive rather than administrative.
The H-1B fee fight fits a broader pattern. Federal judges, often appointed by Democratic presidents, have repeatedly halted Trump administration immigration measures not by disputing the policy goals but by ruling the president used the wrong legal mechanism to achieve them. The argument is procedural: the president can restrict entry, but he cannot impose what amounts to a new tax without Congress.
That procedural framing puts the administration in a bind. Congress has shown willingness to fund immigration enforcement, the House recently cleared a $69.5 billion immigration enforcement package, but legislative action on H-1B fees specifically has not materialized. Without a statute authorizing the charge, courts have treated the proclamation as executive overreach regardless of the policy's merits.
The administration has had better luck at the Supreme Court level on other immigration fronts. The high court delivered two sweeping wins for Trump on immigration enforcement in recent months, upholding broad executive authority in other contexts. Whether the H-1B fee case reaches the justices remains an open question.
The White House did not immediately respond to a request for comment on the 1st Circuit's ruling. The case now returns to the appeals court for a full hearing on the merits, though no timeline for that proceeding has been announced.
Several critical questions remain unanswered. The exemption Trump's proclamation carved out for foreign citizens already in the United States on student visas has not been fully tested in court. And the precise amount of revenue the fee generated during the brief window it was in effect, if any meaningful sum, has not been disclosed.
One editorial perspective on the broader standoff is worth noting: some commentators have argued that Congress, not the courts, deserves the blame for forcing the president to act unilaterally on immigration policy in the first place.
If Congress wants to protect American workers from a visa program that even the president's own proclamation describes as exploitative, it can pass a law and settle the question. Until then, courts will keep telling the executive branch it cannot do Congress's job, and American workers will keep waiting.
