DHS replaces H-1B lottery with wage-based selection system

The Department of Homeland Security published a final rule Dec. 29, 2025, in the Federal Register amending regulations for the H-1B work visa selection process. The rule replaces the random lottery with a wage-based weighted selection system that prioritizes allocation of visas to higher-skilled and higher-paid workers. The rule is effective Feb. 27, 2026, and will apply to the FY 2027 H-1B cap registration season (typically Mar. 2026). This is the most significant change to H-1B selection since the lottery system began in 2014. Demand typically exceeds supply by 3-4x annually.

Under the new system, beneficiaries registered for the H-1B cap are entered into the selection pool with entries weighted according to the wage offered by their prospective employer under the Department of Labor's four-level prevailing wage system. A beneficiary offered a Level 4 wage (senior/specialized positions) receives four entries in the selection pool. Level 3 (experienced positions) receives three entries. Level 2 (qualified positions) receives two entries. Level 1 (entry-level positions) receives one entry. USCIS will randomly select from the weighted pool until the 85,000 cap is reached (65,000 regular + 20,000 advanced degree exemption).

The new system dramatically increases selection odds for high-wage workers. Under the rule, the chance of selection for a Level 4 beneficiary increases to over 61%, and for a Level 3 beneficiary to over 45%, compared to just under 30% for any particular beneficiary under the current random lottery (regardless of skill level). Level 1 and Level 2 beneficiaries will see selection odds decrease significantly. DHS estimates the rule will increase the average wage of selected H-1B workers by $17,000-$20,000 annually. Critics note this calculation assumes high-wage workers are more skilled, which isn't always true.

The rule applies to the 85,000 annual H-1B cap: 65,000 visas in the regular cap and 20,000 in the advanced degree exemption for beneficiaries with U.S. master's degrees or higher. The wage weighting applies to both pools. Employers must attest to the prevailing wage level on the Labor Condition Application (LCA) filed with the Department of Labor before registering for the H-1B lottery. The wage level is determined by the job's requirements, beneficiary's experience, and geographic location. Prevailing wages vary significantly by region—a Level 3 software engineer in San Francisco earns far more than a Level 3 software engineer in Omaha.

DHS says the rule's purpose is to "implement the numerical cap in a way that incentivizes employers to offer higher wages, or to petition for positions requiring higher skills and higher-skilled aliens, that are commensurate with higher wage levels." DHS argues the random lottery treats a Level 1 entry-level position the same as a Level 4 senior position, which "does not effectively prioritize the most valuable foreign workers." The rule aims to reduce reliance on H-1B for lower-wage positions and focus on "the best and brightest" workers. Critics say "best and brightest" is misleading because wage level reflects geography and job classification, not individual talent.

Critics warn the rule disadvantages highly skilled workers in lower-cost regions or entry-level positions. A software engineer in 🌽Iowa (lower prevailing wage) may be as skilled as one in San Francisco (higher prevailing wage) but receives fewer lottery entries because prevailing wages reflect local cost of living, not individual skill. Critics also note that Level 1 designation often reflects job requirements (entry-level position) rather than the beneficiary's qualifications. A PhD graduate may start at Level 1 if the job is classified as entry-level. Immigration advocates say the rule favors large tech companies in high-wage metros over startups and universities in lower-cost areas.

The rule implements a long-standing priority of the Trump administration and some congressional Republicans. Trump's first-term "Buy American, Hire American" executive order in 2017 directed agencies to prioritize high-skilled, high-wage H-1B beneficiaries. A similar proposed rule in 2020 didn't finalize before Trump left office. The 2025 final rule fulfills that goal. The rule doesn't change the 85,000 cap, which has been unchanged since 2005 despite demand exceeding supply by 3-4x annually. Congress would need to pass legislation to increase the cap. Immigration advocates argue raising the cap would do more to help skilled workers than reweighting the lottery.