First Circuit Upholds Block on $100,000 H-1B Fee as Unauthorized Tax

Constitutional law practitioners and regulatory attorneys must now reckon with the First Circuit's clear message: a fee so disproportionate to administrative costs that it serves primarily to raise revenue is a tax requiring congressional authorization, regardless of the label affixed by the executive. This ruling not only shapes future immigration policy but also raises the bar for agencies across sectors attempting to use fee mechanisms for revenue generation.

In a significant judicial setback for the Trump administration's immigration agenda, the Boston-based 1st U.S. Circuit Court of Appeals on July 24, 2026, refused to stay a lower court ruling that had struck down a $100,000 fee imposed on new H-1B visas for highly skilled foreign workers hired from abroad. The three-judge panel concluded that the government had failed to demonstrate a likelihood of success on appeal, effectively leaving in place U.S. District Judge Leo Sorokin's June 8 determination that the fee constituted an unconstitutional tax levied without congressional authorization. This decision not only halts one of the most dramatic cost increases in the program's history but also reinforces the constitutional boundaries between executive and legislative powers in immigration policy.

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Prior to the change, employers typically paid between $2,000 and $5,000 in combined fees to sponsor an H-1B worker.

The legal confrontation traces back to September 2025, when President Trump announced the fee as part of a broader crackdown on the H-1B program, which he claimed had been exploited to replace American workers with cheaper foreign labor. Prior to the change, employers typically paid between $2,000 and $5,000 in combined fees to sponsor an H-1B worker. The new $100,000 charge—a 20- to 50-fold increase—applied exclusively to initial visas for workers entering the U.S., not to those already in the country. Almost immediately, a coalition of 20 Democratic state attorneys general sued, arguing that the fee exceeded the president's authority and functioned as a tax in substance, if not in name.

Judge Sorokin's ruling meticulously dissected the nature of the payment. He emphasized that the fee's primary purpose was to generate revenue—approximately $6.5 billion annually if applied to the full 65,000 visa cap—rather than to cover administrative costs, which remained near the prior fee levels. Invoking the Supreme Court's functional approach in National Cable & Telecommunications Ass'n v. Brand X Internet Services, Sorokin held that "the substance and application of the $100,000 payment reveal that it is a tax, regardless of what the payment is called." Because the Constitution vests taxing power exclusively in Congress, the fee violated the separation of powers. The judge temporarily paused his own injunction to permit appellate review, but the First Circuit's denial of the stay signals that the appeals court sees little merit in the government's arguments.

The Department of Justice had contended that the fee was a lawful exercise of inherent presidential authority over foreign commerce and immigration, and that blocking it impeded the president's ability to address national security concerns. The appeals panel, however, was unpersuaded, declining to issue even an emergency stay pending full appeal. This aligns with a growing body of case law skeptical of broad executive assertions of unilateral authority over economic matters—particularly when the measure imposes a heavy financial burden that functions as a tax.