Texas Cottage Food Laws: Income Caps, Labels, and Sales

Under Texas cottage food law, you can make and sell most foods from your home kitchen without a health permit, a commercial kitchen, or local licensing, as long as you stay under $150,000 in annual gross sales, label your products correctly, complete an accredited food handler course, and avoid a short list of prohibited items. The rules sit in Chapter 437 of the Texas Health and Safety Code, which SB 541 expanded to raise the income cap and open the program to nearly any food that isn’t specifically excluded.¹ Nonprofit organizations also qualify as cottage food production operations.²

What You Can and Cannot Sell

The law works by exclusion. You can produce and sell any food that doesn’t fall into one of six prohibited categories:¹

Meat and poultry, including jerky, sausage, and meat pies.
Seafood, including fish and shellfish and any product made from them.
Ice and frozen desserts such as shaved ice, ice cream, frozen custard, popsicles, and gelato.
Low-acid canned goods, such as canned vegetables or soups that haven’t been properly acidified.
Products containing CBD or THC.
Raw milk and anything made from it.

Everything else is on the table. Baked goods, candy, jams, jellies, roasted coffee, dried herbs, popcorn, granola, nut butters, vinegar, mustard, pickled vegetables, and fermented items like sauerkraut all qualify. Frozen raw and uncut fruits and vegetables are allowed. You can even sell time-and-temperature-controlled foods like cream-filled pastries or quiche, though those carry extra labeling obligations.²

If you want to produce pickled fruits or vegetables, fermented vegetable products, or plant-based acidified canned goods, you must use a recipe from an approved source. DSHS accepts the USDA Complete Guide to Home Canning (2015 revision), the University of Georgia’s “So Easy to Preserve” (6th edition), and certain Ball Corporation canning books. You can also submit a new recipe source for approval through the DSHS Request for Official Determination Form.²

One boundary worth naming: pet treats and dog biscuits are not covered by cottage food law. Animal food falls under the Office of the Texas State Chemist.

Income Cap and Home Production Rules

Your cottage food operation cannot earn more than $150,000 in annual gross income from food sales. DSHS adjusts this figure each year for inflation using the Consumer Price Index for All Urban Consumers, so the actual number may run slightly higher by the time you check.¹ Cross the cap and you lose the exemption, which means transitioning to a licensed commercial operation to keep selling.

All production must happen in your own home. You cannot rent a commercial kitchen, use a church kitchen, or prep food at a friend’s house. A qualifying nonprofit must produce at the home of one of its directors or officers.¹

The person in charge of the operation must complete an accredited food handler’s training course covering hygiene, cross-contamination prevention, and safe food handling. Accredited courses are available online for roughly $10 to $20. Keep your certificate on hand.

Labeling Your Products

Every product has to be packaged to prevent contamination, and every package needs a label. If an item is too large or bulky to package conventionally, you can put the required information on an invoice or receipt instead. The label must include:²

The business name and either your home address or a unique identification number issued in place of an address.
The common or usual name of the food, such as “chocolate chip cookies” or “strawberry jam.”
Any major food allergen in the product, including eggs, tree nuts, soy, peanuts, milk, wheat, or sesame.
The disclaimer: “THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE THAT IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION.”

Pickled, fermented, and plant-based acidified canned goods have one extra requirement: each batch needs a unique batch number on the label so the product can be traced if a safety concern arises.²

Temperature-Sensitive Foods

If you sell a time-and-temperature-controlled food, add the date the food was made to the label. On the label or on a receipt provided at the time of sale, include this statement in at least 12-point font: “SAFE HANDLING INSTRUCTIONS: To prevent illness from bacteria, keep this food refrigerated or frozen until the food is prepared for consumption.”²

How and Where You Can Sell

Cottage food sales are direct-to-consumer. You can sell at farmers’ markets, farm stands, community events, from your own home, or at any location the buyer designates.¹ The delivery rule is strict: you, an employee, or a household member must hand the food to the buyer. Shipping through the mail or using a third-party delivery service like UPS or DoorDash isn’t allowed.

Online sales work with a few conditions. Before accepting payment, you must post all required labeling information on your website so the buyer sees it before completing the purchase. Once payment is accepted, your label must include your address or unique identification number.² Social media is fine for advertising and taking orders as long as you handle delivery yourself.

Selling Through a Cottage Food Vendor

The expanded law created a category called a “cottage food vendor,” meaning a Texas person or business that has a contractual relationship with your operation and sells your products directly to consumers on your behalf. You can wholesale to a cottage food vendor, with one exception: time-and-temperature-controlled foods cannot be sold wholesale. A vendor can place your products at farmers’ markets, farm stands, food service establishments, or retail stores, and anything they sell must include the production date on the label.²

Outside that vendor arrangement, you still cannot wholesale directly to grocery stores, restaurants, or other resellers.

Zoning, HOAs, and Local Rules

Local governments are specifically prohibited from requiring cottage food operators to obtain a permit.² Residential zoning ordinances can still limit customer traffic, signage, and parking, so if buyers will pick up at your home, check whether your city or county has home occupation rules capping daily visits or restricting business hours.

Homeowners associations are a separate problem. HOA covenants are private contracts attached to your deed, and they can prohibit running a business from your home no matter what state law allows. Violating them can bring fines, legal action, or liens against your property. Read your CC&Rs before you start. If they restrict home businesses, you may need a variance, or you may need to operate without visible signage or customer traffic to stay within what the HOA allows.

Insurance, Taxes, and Sales Tax

Standard homeowners and renters policies typically exclude claims arising from business activities, which usually means any activity for economic gain. If a customer gets sick and your policy has a business pursuits exclusion, you are personally on the hook. A commercial general liability policy aimed at food producers covers product liability for illness or injury claims, general liability at farmers’ markets and other venues, and rented premises like event booths. Policies written for cottage food operations generally start around $300 per year, varying with sales volume and the foods you make. Texas law doesn’t require you to carry coverage, but operating without it leaves your personal assets exposed.

Cottage food income is taxable. You report revenue and deduct business expenses on Schedule C of your federal return. Deductible expenses commonly include ingredients, packaging, labels, booth fees, and the portion of your home used for production under the home office rules.³⁴ All income must be reported whether or not a payment processor issues you a Form 1099-K.⁵

Not every sale carries Texas sales tax. Bakery items sold without plates or utensils are generally exempt, which helps if you focus on cookies, bread, or cakes. Candy and snack foods are typically taxable. If you only sell exempt items, you don’t need a Sales and Use Tax Permit from the Texas Comptroller. Add anything taxable like candy or flavored popcorn and you’ll need the permit and have to collect and remit sales tax.

What Happens If You Break the Rules

DSHS and local health authorities do not routinely inspect cottage food kitchens, but they can act through emergency orders and recall orders when there is an immediate and serious threat to public health. Health departments must keep records of every complaint filed against a cottage food operation, so a pattern can draw scrutiny even when a single incident wouldn’t.²

Exceeding the income cap, selling a prohibited food, or missing labeling requirements can cost you the exemption outright. At that point, continuing to sell requires a food establishment permit and a commercial kitchen. Track your gross income carefully through the year and keep records of every product sold, including batch numbers for anything pickled or fermented.

1
State of Texas. Texas Health and Safety Code 437-001
2
Texas DSHS. Texas Cottage Food Production
3
Internal Revenue Service. Simplified Option for Home Office Deduction
4
Internal Revenue Service. Topic No. 509, Business Use of Home
5
Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big Beautiful Bill