The H-1B Lottery Is Going Away. What Now?
By Mahdi Hosseini
TLDR:
The H-1B visa lottery system is likely being replaced by a wage-based selection process as early as March 2026. Higher-paying jobs will be prioritized first. This could significantly impact how tech companies recruit international talent, especially for entry-level roles and early-stage startups.
The H-1B visa system is on the verge of a major change. For years, USCIS has used a random lottery to allocate 85,000 new H-1B visas annually. That may be replaced with a wage-based selection process as early as 2026.
The Department of Homeland Security has submitted a proposed rule that would prioritize visa selections based on the wage offered to each applicant. Higher-paying jobs would be considered first, and if there are more applications than available visas within any given wage level, a random lottery would still apply within that group. Another possible approach is a weighted lottery, where applicants at Level 4 would get four entries, Level 3 three entries, Level 2 two, and Level 1 just one, giving higher-paid candidates a greater chance of selection (net-net it’s the same effect).
This rule was first introduced during President Trump’s initial term, but legal challenges blocked it from moving forward. Now, under the current administration, the proposal has resurfaced and is moving through the rulemaking process. If finalized, the change would apply to the FY 2027 H-1B cycle.
Here’s how it would work: employers would register H-1B candidates as they do now, but USCIS would sort the registrations into four wage levels using prevailing wage data from the Department of Labor. Level IV represents the highest-paid positions, and Level I the lowest. The government would then start selecting candidates from Level IV, then move down to Level III, and so on, until all available visas are used. Within each level, if demand exceeds supply (which it will), selection would still be random within each cohort.
This shift is designed to favor roles that are compensated at the higher end of the market. The policy rationale is to prioritize what the government views as higher-skilled or more specialized jobs based on salary. Critics argue that salary isn’t always a true measure of skill, and that this model could disadvantage recent graduates, nonprofits, startups, and smaller companies that may offer competitive but lower-tier salaries. Supporters believe it would reduce misuse of the system and better align with the intent behind the H-1B program. There are concerns that elevated wage criteria might make it harder for businesses in small cities or niche industries to compete for H-1B talent, potentially disrupting the balance of labor markets across the country.
No changes are planned for the current fiscal year. The FY 2026 lottery has already been conducted and USCIS has announced that all regular and advanced degree cap selections are complete. However, employers and foreign professionals planning to participate in future cycles should start preparing for a very different selection environment.
What This Means for the U.S. Job Market, Especially in Tech
If this rule goes into effect, it could reshape how companies go about hiring foreign talent, particularly in the tech sector, where the H-1B program plays a critical role in filling specialized roles.
For big tech companies that already offer top-of-market salaries, this will likely strengthen their position. Their offers will be more likely to get selected, making it easier for them to continue hiring skilled foreign talent at scale.
For early-stage startups and smaller firms, the change creates a higher barrier. These companies often compete for the same talent but cannot match the cash salaries offered by major players, instead they pay with equity. This may force them to shift toward hiring only U.S. citizens and permanent residents or to explore offshore alternatives. The rise of international EOR companies like Deel, Rippling, Justworks, etc. in the recent years, have made this easier than ever.
For international students and early-career professionals, the path to staying and working in the U.S. could become much more difficult. Many enter the workforce at Level I or Level II wage bands, which under the new system would likely have the lowest odds of selection.
In short, this policy would tilt the playing field in favor of high-paying roles (AKA more senior candidates) and employers with deep pockets (AKA Big Tech). It adds predictability for companies willing to pay but removes opportunity for those building from the ground up.
