Major H-1B Visa Updates: Modernization Rule, FY 2026 Cap Reached, and Lottery Reform Under Review

Major H-1B Visa Updates: Modernization Rule, FY 2026 Cap Reached, and Lottery Reform Under Review

The H-1B visa program, a cornerstone for U.S. employers seeking global talent, has entered a new era of reform. Between late 2024 and 2025, the Department of Homeland Security (DHS) and U.S. Citizenship and Immigration Services (USCIS) introduced sweeping updates to increase fairness, flexibility, and integrity in the system.

As of September 2025, the H-1B cap for Fiscal Year (FY) 2026 is already filled, a new modernization rule has taken effect, and a weighted lottery proposal is under government review. Below is an overview of the most important developments.

H-1B Modernization Rule (Effective January 17, 2025)

The H-1B Modernization Rule implemented earlier this year has reshaped eligibility and compliance standards.

Entrepreneur Pathways

For the first time, entrepreneurs may now qualify for H-1B status if they:

  • Prove a valid employer–employee relationship with their own company, and
  • Spend more than 50% of their time performing a specialty occupation.

This change recognizes the vital role immigrant founders play in driving innovation and job creation.

Expanded Cap-Exempt Sponsorship

The rule broadens the definition of cap-exempt employers, making it easier for nonprofits and government research institutions to hire foreign talent—even when the work is conducted remotely or at off-site locations.

Beneficiary-Centric Lottery

To curb abuse, USCIS now uses a beneficiary-centric lottery system, ensuring each applicant is entered only once, regardless of how many employers submit registrations for them. This reform has already reduced duplicate filings and improved fairness.

Enhanced Oversight

The rule also codifies deference for extension cases and strengthens program integrity through increased worksite inspections.

FY 2026 H-1B Cap Already Reached

On July 18, 2025, USCIS announced that the FY 2026 H-1B cap was met:

  • 65,000 regular cap visas and 20,000 advanced degree exemptions have been allocated.
  • About 336,153 unique beneficiaries were registered, and roughly 118,660 were selected, reflecting a 35% selection rate—an improvement over past years when multiple filings skewed odds.

With the cap reached, no additional cap-subject petitions will be accepted until FY 2027. Only cap-exempt filings (e.g., nonprofit or research institutions) are still eligible for submission.

Proposed Weighted Lottery Rule

A major proposed rule under review could transform the lottery process for cap-subject petitions:

  • Replacing Random Selection: Instead of a purely random draw, the new system would introduce a weighted lottery.
  • Prioritizing Merit: Preference would go to positions offering higher wages and requiring advanced education.
  • Regulatory Process: The proposal has already cleared review by the White House Office of Information and Regulatory Affairs and will soon be published in the Federal Register, opening a public comment period before finalization.

If adopted, this reform would significantly shift employer filing strategies, rewarding companies that commit to paying top wages and hiring at advanced skill levels.

Why These Changes Matter

Together, these updates signal a shift toward a more entrepreneur-friendly, equitable, and compliance-driven H-1B system.

  • Entrepreneurs gain a clearer path to build U.S. businesses.
  • Research and nonprofit sectors enjoy expanded hiring flexibility.
  • Applicants face a more transparent, abuse-resistant lottery.
  • Employers may soon need to adjust recruitment strategies to align with wage- and education-based selection preferences.

The H-1B program remains competitive, with demand far exceeding supply. While the FY 2026 cap is already closed, the modernization rule creates new opportunities—particularly for founders and nonprofits—while the proposed weighted lottery could reshape the system further in the coming years.

Employers and foreign professionals alike should closely monitor these developments and consult qualified immigration counsel to position themselves for success in future H-1B cycles.

Stay Informed

Follow VisaLex for the latest immigration news, regulation changes, and digital filing tips.
We’re committed to making your immigration journey smoother, safer, and smarter.