US Proposes 30% H-1B Visa Wage Increase Rule: Impact on Tech Companies, Indian IT Workers, and Startups in 2026

The United States Department of Labour has proposed a significant overhaul of the wage requirements tied to the H-1B visa program, the primary pathway through which American companies hire skilled foreign professionals in technology, engineering, finance, and other specialised fields. The proposed rule would raise required salaries for H-1B visa holders by approximately 30% on average, a change that, if finalised, would represent one of the most consequential shifts in skilled-worker immigration policy in more than two decades.

The proposal, released as a Notice of Proposed Rulemaking (NPRM), is currently open for a public comment period before any final rule takes effect. It has not yet become law or regulation, and it may be significantly modified or withdrawn entirely before being finalised. Nonetheless, the proposal has sent immediate ripples through the technology industry, sparking debate among employers, immigration attorneys, economists, and the foreign-born professionals who depend on the program.

At stake is a visa category that underpins much of Silicon Valley’s workforce model, according to USCIS. According to the Citizenship and Immigration Services (USCIS), approximately 386,000 H-1B workers are employed in the United States at any given time, with technology roles accounting for the largest share. Countries including India, China, Canada, South Korea, and the Philippines send the greatest number of H-1B professionals to American employers each year.

What Is the New H-1B Wage Proposal?

The H-1B visa program, created under the Immigration Act of 1990, allows U.S. employers to temporarily hire foreign nationals in speciality occupations that require at least a bachelor’s degree or its equivalent in a specific field. To prevent wage depression the concern that foreign workers might be hired at below-market rates, undercutting American workers  the program has always required employers to pay a “prevailing wage.”

The prevailing wage is determined by the Department of Labour using occupational wage surveys. Wages are classified into four levels: Level I (entry-level), Level II (qualified), Level III (experienced), and Level IV (fully competent). Critics have long argued that prevailing wage definitions have been set too low, allowing companies, particularly third-party staffing and outsourcing firms, to place workers at wages well below those of comparable American employees.

The new proposal would recalibrate all four wage levels upward. Under the proposed framework, the wage floors for each level would rise substantially. In some occupational categories and geographic markets, the required minimum salary would increase by up to 35% relative to current levels. The average increase across all levels and occupations is estimated at approximately 30%.

The Department of Labour argues that existing wage benchmarks have fallen behind real market conditions, citing significant growth in technology sector compensation over the past decade, particularly since 2020, when remote work and pandemic-era talent shortages drove technology salaries to new highs. The proposal is intended to better align H-1B wage minimums with actual private-sector compensation data.

KEY FACTS AT A GLANCE: These are proposals only. No changes are in effect yet.

• Proposed Average Wage Increase: ~30% across all H-1B wage levels
• Maximum Increase in Some Categories: Up to 35% for certain tech occupations in high-cost metros
• Current H-1B Workers in the U.S.: ~386,000 as of the latest USCIS data
• Comment Period: 60 days from publication in the Federal Register
• Effective Date (if finalised): TBD, potentially 60–90 days after final rule publication

How Much Could H-1B Salaries Increase?

To understand the scope of the proposed changes, it helps to look at what prevailing wages currently require and what the new proposal would demand.

Under the current system, a Level I (entry-level) software developer in the San Francisco Bay Area is required to receive a minimum annual salary of approximately $106,000. Under the proposed rule, that floor would rise to roughly $140,000. For a Level III (experienced) software engineer in the same market, the current minimum of approximately $155,000 would increase to approximately $205,000.

In lower-cost metropolitan areas, the absolute dollar increases would be smaller, but the percentage shifts remain significant. A Level II computer systems analyst in Austin, Texas, currently subject to a minimum of approximately $88,000, could face a new floor near $115,000 under the proposal.

For non-technology roles covered by the H-1B, such as accountants, architects, physicians, and financial analysts, increases would follow similar patterns, though the specific percentages vary by occupation and region.

It is important to note that these are proposed minimums. Many H-1B workers, particularly at large technology companies such as Google, Apple, Microsoft, Amazon, and Meta, already earn salaries well above current prevailing wage requirements. For those workers, the practical impact of the proposed rule may be limited. The largest disruptions would fall on employers and workers operating closer to current wage floors, a group that includes many smaller technology firms, consulting companies, and IT staffing organisations.

Why is the U.S. changing H-1B Wage Rules?

The proposed wage increase emerges from a long-running debate about the purpose and structure of the H-1B program. Supporters of higher wage floors argue that the program, as currently structured, creates incentives for some employers to substitute lower-paid foreign workers for higher-paid American ones, a practice they say undermines domestic technology workers and suppresses wages broadly.

A 2020 report by the Economic Policy Institute found that prevailing wage levels under the H-1B program at the time were set at or below the median market wage for many occupational categories, effectively permitting employers to pay foreign workers less than their American counterparts in similar roles. That analysis became a frequently cited data point in policy discussions that preceded the current proposal.

The federal government has also noted the dramatic increase in overall technology compensation since 2020. Between 2020 and 2025, median software engineering salaries in the United States increased by 20% to 40% across many major technology hubs, driven by a surge in demand for digital infrastructure, AI development, and cloud computing. The proposed rule is partly an acknowledgement that prevailing wage surveys have not kept pace with those market shifts.

Additionally, the Department of Labour has cited concerns about certain third-party staffing models sometimes called “body shopping”, in which H-1B workers are hired by staffing firms and then placed at client companies at wages that critics argue undercut direct-hire market rates. The higher wage floors in the proposal are widely seen as a targeted response to that business model.

The proposal does not cite any specific legislation as its statutory basis, other than the Department of Labour’s existing authority under the Immigration and Nationality Act. Officials have described it as a regulatory modernisation effort consistent with existing law.

Impact on Technology Companies and Employers

For large technology companies that routinely pay salaries well above current prevailing wage thresholds, the proposed rule may have limited direct financial impact. A senior software engineer at a major U.S. technology firm earning $250,000 per year is unlikely to see any change in compensation requirements as a result of these adjustments, since that salary already far exceeds any proposed new minimum.

The companies most directly affected are those operating closer to existing wage floors. These include:

• Small and mid-sized technology firms that use H-1B visas to fill specialised roles at competitive but not premium salaries
• Information technology services and consulting companies that rely on H-1B workers placed at client sites
• Outsourcing companies including some of the largest Indian IT services firms operating in the United States that maintain large H-1B workforces
• Healthcare organisations and academic institutions that sponsor H-1B workers in technical or research roles
• Startups that depend on H-1B status for co-founders or early engineering hires from abroad

For these employers, the proposed wage increases could substantially alter their cost structures. A staffing company currently placing 500 H-1B workers at an average salary of $95,000 near current wage floors in some markets could face average annual cost increases of $25,000 to $30,000 per employee if the proposed thresholds become final. At scale, that translates to tens of millions of dollars in additional labour expense.

Some immigration and human resources experts anticipate that higher wage requirements could lead employers to reduce H-1B sponsorships, accelerate automation, shift certain work offshore, or prioritise candidates with existing work authorisation such as U.SS. citizens, green card holders, or individuals with other visa categories that do not require employer wage floor compliance.

“The companies that will feel this most acutely are mid-market IT services firms and outsourcers. Large tech companies already pay well above these thresholds; this is really a structural correction aimed at a particular segment of the H-1B market.”

Startup founders and immigration attorneys have also raised concerns that increased wage requirements could make it more difficult for early-stage companies to sponsor exceptional international talent when they cannot yet afford market-rate compensation packages. Several startup advocacy organisations have indicated they plan to submit public comments opposing portions of the proposal.

On the other side of the debate, domestic technology worker advocacy groups, including some labour unions and domestic technology worker coalitions, have broadly supported the wage increase proposal, arguing it would protect American workers from unfair wage competition and ensure the H-1B program is used for genuinely in-demand specialised roles rather than routine IT work.

Impact on Foreign Skilled Workers

For the hundreds of thousands of professionals working in the United States on H-1B visas, the proposed wage changes present both opportunities and risks.

Workers at companies that already pay well above current wage floors are unlikely to experience any disruption. Indeed, the proposal could benefit some H-1B workers who are currently being paid near the minimum required levels; a final rule requiring higher wages could result in direct salary increases for those individuals, assuming their employers choose to retain them under the new requirements.

However, workers employed by companies operating near current wage minimums face a more uncertain situation. If their employer cannot or will not absorb the increased labour cost, potential outcomes include:

• Reduced headcount through layoffs or non-renewal of H-1B sponsorships
• Conversion of certain roles to offshore positions in India, Eastern Europe, or Southeast Asia
• Increased pressure on current H-1B holders to accept other changes to their compensation structure or job responsibilities
• Difficulty finding a new H-1B sponsor if their current employer discontinues sponsorship

For H-1B workers who are also applying for permanent residency (a green card) through employer sponsorship, a disruption to their current employment can have serious immigration consequences. The employment-based green card process in the United States can take many years and, in some cases, decades, particularly for nationals of India, who face extraordinarily long backlogs due to per-country numerical limits. A change in employer or the loss of sponsorship can significantly reset or complicate that process.

Workers outside the United States who are considering applying for H-1B status through the annual lottery system, which selects petitions randomly from a pool that has in recent years been three to five times oversubscribed, may find that the new wage requirements ultimately benefit them, since employers sponsoring workers at higher salaries are arguably selecting for higher-skilled, more specialised roles.

What Indian and Global Tech Professionals Should Know

India sends more H-1B visa holders to the United States than any other country, by a substantial margin. In fiscal year 2024, Indian nationals accounted for approximately 72% of all approved H-1B petitions. This concentration reflects both the scale of India’s technology education system and the extensive relationships between Indian IT services companies and U.S. corporate clients.

For Indian technology professionals and others from high-sending countries, the proposed wage changes carry several important implications:

• Professionals in the pipeline for H-1B sponsorship at IT staffing firms should ask their potential sponsors how the proposed wage changes would affect their placement and compensation
• Workers already holding H-1B status should review their current salary relative to proposed new prevailing wage levels for their occupation and location.
• Those pursuing green card sponsorship through their H-1B employer should consult with an immigration attorney to understand how employment disruption might affect their pending applications.
• Professionals with STEM degrees may benefit from Optional Practical Training (OPT) extensions that provide additional time to secure H-1B sponsorship.p
• Workers considering switching employers should evaluate whether prospective sponsors are financially positioned to meet new wage requirements.s

For technology professionals in other high-sending countries, including China, South Korea, Canada, the Philippines, and Brazil, similar considerations apply. However, green card backlogs are generally shorter than for Indian nationals.

Immigration attorneys consistently emphasise that professionals should not make major career or relocation decisions based on the proposed rule alone, given the uncertainty of the rulemaking process and the real possibility of significant revisions before any final rule is issued.

Future Outlook for H-1B Visa Hiring

The H-1B program has been a subject of reform proposals from both major U.S. political parties for many years, though the nature of proposed changes has varied widely. The current wage increase proposal is best understood as a regulatory action, not a legislative one, meaning it can be implemented, modified, or reversed by the executive branch without an act of Congress.

The 60-day public comment period following publication of the NPRM in the Federal Register is a standard and legally required element of the federal rulemaking process. During that period, any individual, company, organisation, or government entity may submit comments that the Department of Labour is required to read and consider before issuing a final rule.

Immigration policy experts note that public comment periods frequently result in modifications to proposed rules. Given the significant business interests affected by the H-1B wage proposal, from Fortune 500 technology companies to small staffing firms to thousands of individual employers, the comment period is expected to generate substantial input from across the spectrum of stakeholders.

Several scenarios are plausible following the comment period:

• The rule is finalised largely as proposed, taking effect within 60 to 90 days of the final rule publication
• The Department of Labour issues a revised final rule with modified wage levels or phase-in timelines in response to public comment.t
• The rule is delayed pending further review, particularly if there is a change in administration or a legal challenge from affected industry groups.
• The rule is withdrawn and replaced with a different proposal

Legal challenges from industry organisations are considered likely if a final rule is issued. Courts have previously reviewed the scope of the Department of Labour’s authority to set H-1B wage requirements, and additional litigation would be consistent with historical patterns of litigation surrounding major immigration regulatory changes.

Separately, Congress has periodically considered comprehensive H-1B reform legislation that would address wage, selection, and eligibility questions through statutory changes rather than regulatory ones. No such legislation has advanced in recent years, though observers from across the policy spectrum have noted bipartisan interest in H-1B reform.

For employers and workers, the most important near-term development to watch is the outcome of the public comment period and any subsequent announcement from the Department of Labour regarding whether and when a final rule will be issued.

Conclusion: What Businesses and Workers Should Watch Next

The proposed 30% H-1B wage increase rule is a significant regulatory development that deserves careful attention from everyone connected to the U.SS. technology labour market employers, HR and legal teams, immigration attorneys, and the international professionals who hold or are pursuing H-1B status.

At this stage, the proposal is exactly that: a proposal. It carries no legal force until finalised, and the final version, if one is issued, may differ materially from the version released for public comment. Reacting prematurely to a rule that may change substantially, or that may not take effect at all, would be a mistake for both employers and workers.

That said, responsible planning requires awareness of the direction of travel. The wage increase proposal signals that the federal government views current H-1B wage minimums as inadequate and that some form of upward revision is a policy priority, regardless of the precise figures that ultimately emerge from the rulemaking process. Companies that depend heavily on H-1B labour at or near current wage floors should begin modelling the cost implications of various scenarios and evaluating their workforce strategies accordingly.

For foreign skilled workers, particularly those mid-career or early in their immigration journey, this is a moment for careful consultation with qualified immigration counsel not alarm, but prudent awareness of an actively evolving policy environment.

TechAmerica.ai will continue to track this rulemaking closely. We will report on the public comment period, any revisions to the proposed rule, and developments in related legislation or litigation as they occur.