Starting a home-based baking business? Understanding cottage food laws is crucial for operating legally and avoiding costly fines. These laws vary dramatically by state - what's perfectly legal in California might be prohibited in New York.
Important 2025 Updates: Several states have significantly expanded their cottage food laws, with Texas raising its revenue cap to $150,000 (effective September 1, 2025), Florida increasing to $250,000, and multiple states adopting "food freedom" approaches that eliminate revenue caps entirely.
This comprehensive guide covers cottage food laws across all 50 states with the latest 2025 updates, helping you understand what you can sell, where you can sell it, and what permits you need.
What Are Cottage Food Laws?
Cottage food laws allow individuals to prepare and sell certain low-risk foods from their home kitchens without requiring commercial kitchen facilities or extensive licensing. These laws were created to support small entrepreneurs and preserve traditional food preparation methods.
Key Benefits:
- Lower startup costs - no commercial kitchen required
- Simplified licensing - reduced paperwork and fees
- Flexibility - work from home on your schedule
- Market testing - perfect for validating business ideas
Common Restrictions:
- Limited food types - typically non-potentially hazardous foods
- Sales caps - annual revenue limits (often $15,000-$50,000)
- Sales venues - restrictions on where you can sell
- Labeling requirements - specific information must be included
Cottage Food Law Classifications
As of 2025, states generally fall into four categories:
Food Freedom States
- No revenue caps for most operations
- Allow both shelf-stable and many perishable foods
- Minimal or no licensing requirements
- Examples: Wyoming, North Dakota, Utah, Montana, Oklahoma, Missouri, Alabama
High Revenue Tier ($50,000+)
- Revenue limits from $50,000 to $250,000
- Allow various sales channels including online and retail
- Require training and/or permits
- Examples: Texas ($150,000), Florida ($250,000), California ($100,000)
Medium Revenue Tier ($20,000-$50,000)
- Traditional cottage food approach with moderate limits
- Usually allow farmers markets and direct sales, some online
- Basic training and labeling requirements
- Examples: Connecticut ($50,000), Illinois ($50,000), Minnesota ($78,000)
Low Revenue Tier (Under $25,000)
- Conservative approach with strict limitations
- Often limited to direct sales and farmers markets only
- Examples: Wisconsin ($5,000), Pennsylvania ($25,000), Indiana ($2,500)
What Foods Are Generally Allowed?
Most cottage food laws allow these low-risk foods:
Baked Goods
- Breads and rolls
- Cookies and crackers
- Cakes and cupcakes (without cream filling)
- Pies (fruit-based, no cream/custard)
- Muffins and quick breads
- Granola and cereal
Confections
- Hard candies
- Fudge and chocolate
- Caramel and brittles
- Dried fruit leather
- Nuts and popcorn
Preserves & Condiments
- Jams and jellies (high acid)
- Fruit butter
- Honey products
- Vinegar-based sauces
- Dry spice blends
What Foods Are Typically Prohibited?
High-risk foods requiring refrigeration or special handling:
Dairy-Based Products
- Cream cheese frosting
- Custard or cream pies
- Cheesecakes
- Ice cream or frozen desserts
Meat & Seafood
- Jerky or dried meats
- Canned fish or meat
- Pet treats with meat
Fresh or Perishable Items
- Fresh pasta
- Cut fresh fruits/vegetables
- Beverages (except some states allow certain drinks)
- Fermented foods (varies by state)
Important Note: Time and Temperature Control for Safety (TCS) Foods
As of 2025, eight states now allow certain perishable/TCS foods that require refrigeration: California, Iowa, Montana, North Dakota, Oklahoma, Utah, Wyoming, and Texas (effective September 1, 2025). These typically require additional food safety training and stricter labeling requirements.
State-by-State Quick Reference
Cottage Food Laws by State (2025)
Showing 51 of 51 states and regions
Step-by-Step Compliance Guide
Cottage Food Business Setup Checklist
-
Research Your State's Laws (2-4 hours)
- Contact your state health department
- Review official cottage food guidelines
- Join local cottage food groups and forums
-
Understand Local Requirements (1-2 hours)
- Check city and county permit requirements
- Verify zoning compliance for home business
- Research additional local training needs
-
Complete Required Training (4-8 hours)
- Food safety course (if required)
- Food handler's permit
- Any other state-mandated education
-
Register Your Business (2-3 hours)
- Apply for cottage food permit
- Obtain general business license
- Register for tax purposes
-
Set Up Proper Labeling (3-4 hours)
- Design compliant labels with required information
- Include mandatory disclaimers
- Test label designs with sample products
-
Arrange Insurance Coverage (1-2 hours)
- Research liability insurance options
- Get quotes from multiple providers
- Purchase appropriate coverage
-
Test Your Products & Pricing (5-10 hours)
- Finalize recipes and standardize processes
- Calculate true costs including labor
- Set competitive pricing strategy
-
Launch Sales Operations (Ongoing)
- Start with direct sales to test market
- Gather customer feedback
- Refine operations based on experience
Required Labeling Elements (2025 Standard)
All cottage food products must include:
- Producer's name and address (some states allow permit ID instead of home address)
- Product name and net weight/volume
- Ingredient list in descending order by weight
- Allergen statements for the top 9 allergens
- Cottage food disclaimer - exact wording varies by state
Standard cottage food disclaimer: "This product was produced in a private residence that is exempt from inspection."
Alternative disclaimer (some states): "Made in a home kitchen that is not subject to public health inspection that may also process common food allergens."
Additional Labeling for TCS Foods (Where Allowed)
- Storage instructions (e.g., "Keep refrigerated")
- Use-by dates or consumption timeframes
- Safe handling instructions
Common Cottage Food Mistakes to Avoid
Critical Warning: Selling Prohibited Foods
Never assume your state allows the same foods as neighboring states. Stick strictly to your state's approved food list. When in doubt, contact your health department directly - it's not worth the risk of fines or business closure.
1. Exceeding Revenue Limits
- Track all sales carefully and include the full selling price, not just profit
- Many cottage food operators accidentally exceed limits by not understanding what counts toward their annual cap
- Consider transitioning to a commercial kitchen before hitting your state's revenue limit
2. Improper Labeling
- Use the exact wording required by your state for cottage food disclaimers
- Include all mandatory information: product name, ingredients list, allergen warnings, net weight, your name and address
- Update labels immediately when laws change
3. Selling in Prohibited Venues
- Understand your state's rules on direct vs. indirect sales
- Get written permission for special events and farmers markets
- Never sell across state lines without researching both states' laws - interstate commerce has additional federal requirements
4. Ignoring Local Requirements
- State cottage food laws are just the beginning
- Check city and county regulations, understand zoning restrictions, and obtain proper business licenses
- Local health departments often have additional requirements beyond state laws
Growing Beyond Cottage Food Laws
When to Consider Commercial Kitchen
Consider transitioning when you:
- Approach your state's revenue limit
- Want to sell prohibited foods
- Need wholesale distribution
- Require greater production capacity
- Want to ship across state lines
Commercial Kitchen Options
Shared Commercial Kitchens
- Rent kitchen space by the hour
- Meets health department requirements
- Often includes storage and equipment
Commissary Kitchens
- Dedicated space for food businesses
- May offer additional services
- Typically requires longer-term commitments
Build Your Own
- Maximum control and flexibility
- Significant upfront investment
- Requires permits and inspections
Staying Compliant and Updated
Regular Check-ins
- Review state laws annually
- Subscribe to health department updates
- Join cottage food associations
- Network with other cottage food operators
Record Keeping Best Practices
- Track all sales and expenses
- Maintain ingredient purchase receipts
- Document food safety training
- Keep customer contact information
Insurance Considerations
While not always required, consider:
- General liability insurance
- Product liability coverage
- Home business endorsements
- Commercial auto (if delivering)
Resources for Cottage Food Operators
Government Resources
- FDA Cottage Food Guidance: Official federal guidelines
- State Health Departments: Primary regulatory authority
- USDA Rural Development: Funding and support programs
Educational Organizations
- Cottage Food Law Resource Center: Comprehensive state guides
- Institute of Food Technologists: Food safety education
- Small Business Administration: Business development resources
Technology Tools
- Butterbase: Ingredient tracking and recipe costing
- Square/PayPal: Payment processing
- Canva: Label and marketing design
- QuickBooks: Financial tracking
Conclusion
Cottage food laws open the door to starting a home-based baking business with minimal upfront investment. However, compliance is crucial - violations can result in fines, business closure, and legal liability.
Start by thoroughly researching your state's specific requirements, complete all necessary training, and maintain detailed records. As your business grows, plan for the transition to commercial kitchen operations.
Remember: cottage food laws are designed to help small food entrepreneurs succeed while ensuring public safety. Work within the system, and you'll build a strong foundation for long-term business growth.
Ready to start your cottage food business? Butterbase helps cottage food operators track ingredient costs, manage recipes, and maintain compliance records. Our platform is designed specifically for home-based food businesses. Join our beta program to streamline your cottage food operation from day one.
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