US HIRE Act, H-1B Fee and EAD Rule: What They Mean for Outsourcing in 2026

Quick answer: Three U.S. policies are changing how American businesses think about staffing finance and accounting work: the proposed HIRE Act (a 25% tax on outsourcing payments that is still in committee), the $100,000 H-1B payment (currently blocked by federal courts), and the end of automatic EAD extensions (now a final rule and in force). Only the EAD change applies today. The other two are live risks to plan around, not settled law.

Where Each Policy Stands Today

What Is the US HIRE Act?

The Halting International Relocation of Employment (HIRE) Act, S. 2976, is a bill from Senator Bernie Moreno (R-Ohio) that would charge U.S. businesses a 25% excise tax on payments to foreign persons for labor or services that benefit U.S. consumers. It would also deny a tax deduction for those payments. Senator Moreno announced it on September 5, 2025 and formally introduced it on October 6, 2025.

Key provisions as drafted:

• A 25% excise tax on fees, royalties, service charges and similar payments to foreign persons when the services benefit U.S. consumers. If a service benefits both U.S. and non-U.S. consumers, only the U.S. portion is taxed.
• No tax deduction for the outsourcing payment or for the excise tax itself.
• Treasury could require businesses to report these payments.
• Penalties for non-payment would rise from 0.5% per month to 50% per month, with no cap.
• Revenue would fund a Domestic Workforce Fund for apprenticeships, reskilling and state grants.
• The original effective date was payments made on or after January 1, 2026. That date has passed and the bill has not become law.

What it could cost. Because the payment would be both taxed and non-deductible, the effect compounds. Cullen and Dykman calculated that a $100 outsourcing payment that costs about $79 after tax savings today would cost about $125 under the bill, a jump of roughly 58%.

Who it could reach. The bill does not name India or any other country. But as the same analysis notes, its wording is broad enough to cover third-party vendors, company-owned captive centers (GCCs) and individual freelancers abroad. RSM also points out that payments to foreign affiliates could face both this tax and the base erosion tax (BEAT).

Will it pass? It is a long shot so far. The bill sits in the Senate Finance Committee, and its sponsor is not a member of that committee. Many advisers treat it as a low-probability, high-impact risk rather than a baseline cost. Even so, it signals where U.S. policy debate is heading, and it could resurface in trade talks or tax legislation.

Read also: The One Big Beautiful Bill Act: Key Federal Tax Changes

What Is the $100,000 H-1B Fee, and Is It in Effect?

On September 19, 2025, a presidential proclamation required employers to pay $100,000 for certain new H-1B petitions, mainly for workers outside the U.S. who need consular processing. As of late October 2026, courts are blocking it, and employers are not currently required to pay it.

How we got here:

• September 19, 2025: Proclamation 10973 takes effect.
• June 8, 2026: A federal court in Massachusetts rules the fee unlawful and vacates the agency policies that implemented it, reasoning that a payment like this works as a tax and needs clear authorization from Congress.
• July 2026: The First Circuit declines to pause that ruling while the government appeals, so USCIS cannot collect the fee in the meantime.
• September 2026: The administration extends the proclamation through September 21, 2027.
• September 30, 2026: A federal court in California separately blocks USCIS, CBP and the State Department from enforcing it and denies a stay.

Litigation is still ongoing, so the picture can change quickly. Employers with H-1B filings in the pipeline should confirm the current position with immigration counsel before filing. SHRM tracks the latest developments.

What Is the Proposed $103,265 H-1B Fee?

On August 25, 2026, DHS published a proposed rule that would add a $103,265 fee to every cap-subject H-1B petition, including those under the U.S. advanced-degree exemption. It would be paid at filing, on top of existing fees. It is separate from the $100,000 proclamation payment and, as of today, it is not in effect.

Cap-exempt employers such as universities and nonprofit research organizations would not pay it, and H-1B extensions are generally outside its scope. DHS estimates the fee could raise roughly $8.8 billion a year across about 85,000 cap-subject petitions. The proposal still has to clear public comment, a final rule and likely legal challenges. Boundless has a clear breakdown of how it differs from the proclamation fee.

Did the U.S. End Automatic EAD Renewals?

Yes. For most affected categories, workers who file an EAD renewal on or after October 30, 2025 no longer receive an automatic extension of up to 540 days. DHS issued the change as an interim final rule on that date and finalized it without changes on October 14, 2026.

What stays the same:

• Renewals properly filed before October 30, 2025 keep the automatic extension.
• Extensions granted by law or by Federal Register notice, including certain TPS-related extensions, are not affected.

What it means for employers: If an employee’s EAD expires before the renewal is approved, they cannot keep working until the new document arrives. USCIS recommends filing up to 180 days before expiry. DHS itself acknowledges the rule may create staffing gaps, so your I-9 team needs to separate employees covered by older automatic extensions from those under the new rule.

For finance teams, the risk is concrete. A gap in the middle of a month-end close, an audit or tax season can delay reconciliations, filings and payments.

How Do These Policies Affect Outsourcing and Offshoring?

Together, they make visa-dependent hiring inside the U.S. more expensive and less predictable, which pushes some companies to compare offshore delivery models. But the policies do not all point the same way, and that matters when you plan.

• On-site hiring carries more cost and timing risk. Proposed and litigated H-1B fees, plus EAD gaps, raise the price of relying on visa-dependent staff. Small and mid-sized businesses feel this most because they have less room to absorb it.
• Offshore delivery looks more attractive for continuity. Teams outside the U.S. immigration system are not affected by EAD or H-1B timelines. Reuters has reported that Indian IT firms are reworking their U.S. delivery models in response to the H-1B changes.
• The HIRE Act pulls the other way. If it ever became law, it would tax offshore work directly. That is why a flexible sourcing strategy is safer than betting everything on one policy outcome.
• Jobs may shift rather than grow. Analysts at the Global Trade Research Initiative have suggested the H-1B fee may not add many U.S. jobs and could move some work overseas.

Why India’s Global Capability Centers Keep Growing

India’s GCC sector keeps expanding despite the policy noise. According to the Zinnov-Nasscom GCC Landscape 2026, India had 2,117 GCCs operating across 3,728 units in FY2026. They employed about 2.36 million people and generated roughly $98.4 billion in revenue, and 506 Forbes Global 2000 companies run one there.

GCCs are offshore units that companies use to access specialized talent and run complex processes without relocating teams to the U.S. The sector is also moving up the value chain, from transaction processing toward finance, analytics, engineering and AI work.

Companies that do not want to build their own captive center can use a managed model instead. KMK’s Global Capability Center for accounting and finance gives U.S. firms a dedicated offshore team without the setup burden.

Read also: GCC vs GIC vs GBS: What’s the Difference?

How to Protect Your Finance and Accounting Operations

You cannot control immigration or tax policy, but you can control how exposed your finance function is to it. Five steps help:

1. Map your exposure. List which finance and accounting employees rely on an EAD or H-1B, and note every expiry date in the next 12 months.
2. Calendar renewals early. File EAD renewals as close to 180 days before expiry as allowed, and assign one owner to track them.
3. Document and cross-train. Write down your month-end close, AP, AR and payroll procedures so work can move between people without delay.
4. Build a flexible offshore layer. Move repeatable work such as bookkeeping, accounts payable, accounts receivable, payroll management and reporting to a partner that can scale up or down.
5. Plan for tax-law changes. Add a change-in-law clause to outsourcing contracts, and model a scenario where payments become 25% more expensive and non-deductible, so a future decision is not a surprise.

Read also: How Outsourced Finance and Accounting Services Help U.S. Companies Offset Tariff Pressures

Why U.S. Businesses Work With KMK Ventures

KMK Ventures is an outsourced accounting, tax and finance partner for U.S. businesses, with a team of 2,000+ professionals that includes CPAs, chartered accountants and staff accountants. Our teams in India sit outside the U.S. immigration system, so an EAD delay or H-1B change does not interrupt your delivery.

• U.S. expertise: U.S. GAAP, tax preparation, fund accounting and financial reporting, with strong process controls.
• Full service range: Bookkeeping, outsourced tax services, FP&A, virtual CFO services and audit support.
• Cost and scale: Staff accountant rates start at $15 per hour, and teams can grow or shrink with your workload.
• Time-zone overlap: Our working hours of 4:30 AM to 1:30 PM EST give your team same-day access.
• Security: Documented controls and regular reporting, detailed on our data security page.

We cannot promise that tax law will never change. What we can do is give you a flexible, transparent engagement model so you can adjust if it does.