Congress’ Taxing Power Key to Trump Loss on $100,000 H-1B Fee

President Donald Trump’s first major defeat in legal challenges to his $100,000 fee on new H-1B workers turned on whether the policy unlawfully supplants the exclusive tax power of Congress.

A federal judge in Boston answered yes on Monday in a win for Democrat-led states, concluding the policy violates the the Constitution’s separation of powers. Although the president may have sweeping authority to limit entry to the US, he cannot do so by enacting taxes, Judge Leo Sorokin wrote in vacating the fee .

The issue has emerged as a key question in multiple lawsuits seeking to strike down the fee, which has effectively blocked H-1B hiring at hospitals, universities, and schools since it was imposed last September and contributed to a a steep drop in entries for the annual H-1B lottery this spring.

The US Chamber of Commerce, which also sued over the fee, failed to win an injunction late last year. But that loss predated the US Supreme Court’s 6-3 decision in February overturning Trump’s global tariffs regime. It’s currently pending at the US Court of Appeals for the District of Columbia Circuit, along with another challenge in the Northern District of California.

Citing to Learning Resources, Inc. v. Trump, Sorokin found broad authority to add restrictions under the Immigration and Nationality Act, but nothing in that statute or elsewhere indicating lawmakers intended to delegate their taxing power.

The conclusion that Congress wouldn’t have conferred that highly consequential power through ambiguous language was central to the opinion, said Lynden Melmed, a partner at business immigration firm BAL and former chief counsel at US Citizenship and Immigration Services.

“This case may have only involved a single fee on a single visa category, but Judge Sorokin recognized that, at its core, it was a question about whether Congress or the Executive Branch sets immigration policy,” he said.

White House spokeswoman Taylor Rogers said the administration is “confident” that Sorokin’s order will be reversed on appeal.

High Court Precedent

Homeland Security Secretary Markwayne Mullin said in an appearance on Capitol Hill last week that he was open to flexibility on the H-1B charge without committing to broad exemptions for workers like physicians. In hearings and court filings, government attorneys have confirmed few businesses have paid the fee.

The White House’s fee proclamation relied on Section 212(f) of the INA, which allows the president to restrict the entry of noncitizens.

In a 2018 ruling on the first Trump administration’s travel ban policy, the Supreme Court found in Trump v. Hawaii that the provision extended broad authority to block entry of certain classes of immigrants when he deems it detrimental to the national interest.

But that power had never been used to add financial restrictions on the entry of foreign nationals, attorneys noted.

Learning Resources reaffirmed that the president has the power to regulate, but not add taxes without Congress. Although the ruling applied to Trump’s tariffs, opponents of the H-1B charge argued it should be fatal to the $100,000 fee, as well.

Sorokin, an Obama appointee, agreed and found that taxing authority can’t be wielded by the president without explicitly language conferring it by lawmakers.

He was also unconvinced by arguments from the government that the H-1B fee was not a tax because it hasn’t generated revenue or is more properly seen as a “regulatory payment.”

“Here, the substance and application of the $100,000 payment reveal that it is a tax, regardless of what the payment is called,” he wrote.

Potential Effects

Sorokin’s decision, along with a separate June 5 ruling that vacated the government’s freeze on certain immigration benefits, shows 212(f) can’t be wielded as broadly as the Trump administration would like, said Cyrus Mehta, founder and managing partner at Cyrus D. Mehta & Partners PLLC.

“There’s more power to that argument since Learning Resources,” he said. “It’s moved the needle in favor of plaintiffs challenging the $100,000 fee now.”

Monday’s decision is “good news for rural healthcare workers and educators, like our clients,” said Emily Satifka, counsel at Justice Action Center, which represents a coalition of employers that brought a separate challenge to the rule in Oakland, Calif.

Bo Cooper, a partner at immigration firm Fragomen, said it’s likely too early to say how companies’ plans for sponsoring H-1B workers will change.

“Unless the government decides to just fold its tent on this fee, which I think is unlikely, it’s likely this case is headed to the Supreme Court,” he said.

The states who challenged the fee are represented by their offices of attorney general. The government is represented by the Department of Justice.

The case is State of California v. Mullin, D. Mass., No. 1:25-cv-13829, order issued 6/8/26.