Under current law, a special exemption exists for holders of U.S. Master's degrees. Specifically, the law allocates an additional 20,000 H-1Bs for holders of U.S. Master's degrees. This means that holders of U.S. Masters degrees are first counted against the quota of 20,000, and then after that quota runs out, they are counted against the regular quota.
For fiscal 2008, the U.S. Master's degree quota ran out a few weeks after the regular quota ran out, i.e., on April 30, 2007.
Current law defines an individual who qualifies under this special quota as follows: ""has earned a master's or higher degree from a United States institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))...." INA 214(g)(5)(C)
It is important to note that an H-1B applicant does not actually have to be relying on the U.S. Master's degree for the H-1B petition. For example, if an H-1B applicant holds a bachelor's degree in computer science, and a U.S. Master's Degree in Music, he or she could apply for an H-1B for a computer programmer position, and still rely on the unrelated, U.S. Master's Degree in Music for quota purposes.