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Cottage Food Law Updates Every Microbakery Owner Should Know | Episode 137

  • Apr 16
  • 10 min read

Updated: 1 day ago

Listen on Apple Podcasts or watch on YouTube


Up until the fall of 2021, if you lived in New Jersey and you baked a loaf of bread in your own kitchen, selling it was against the law. Not a permit you could not get, not a cap you could not stay under. Selling homemade baked goods from a home kitchen was simply not allowed, and New Jersey was the fiftieth state to change that.


If you have ever felt boxed in by your own state's cottage food rules, that story matters more than it might seem at first. These laws are not fixed. They move, sometimes quickly, and most of us are working from information that is a year or two out of date.


I spent the last couple of weeks digging into cottage food law across the country, cross checking everything against the states themselves rather than blog roundups. What I found surprised me, some of it made me genuinely glad, and one part of it made me a little frustrated because the internet is telling this story wrong in a way that could get a baker in trouble.


Here is what actually changed, what the blogs are getting wrong, what to do if you are closing in on your income cap, and what you can personally do if your state needs to change.


Refrigeration rules are loosening in more states than you think

For most of the time cottage food laws have existed, the rule almost everywhere has been shelf stable only. No cream cheese, no custard, nothing that has to live in a fridge. That is still true in a lot of states. But it is changing in more places than most bakers realize.

Texas, where I live, changed its law last year to allow some refrigerated foods from a home kitchen. In my research I also found Tennessee, Oklahoma, Montana and Wyoming now allow it. Tennessee does not attach any extra requirements to it at all. Oklahoma wants a short online food safety course. Texas wants you registered with the state. Every one of those five states has written the rule a little differently, which is exactly why you cannot take my word for this and go sell refrigerated food tomorrow. You have to check your state.


Where it is allowed, it opens up real menu opportunities. Cheesecake. Cream cheese frosting on cinnamon rolls. Tres leches. Here in Texas, I could now sell refrigerated pizza dough, cookie dough or pre-bottled lattes from a home kitchen, all things I sell in my storefront today. I know bakers in Texas who did not realize the law had changed and have been missing those opportunities without knowing it. If your state has not made this shift yet, it might be coming!


Some states are indexing their income caps to inflation

The second real shift is in income caps. A handful of states have started raising their sales caps automatically every year instead of leaving the number frozen.

Here is why that matters. If your state set a cap of $50,000 in 2013 and never touched it again, that is not a $50,000 cap anymore in today's dollars. It is worth substantially less, and every year the baker after you is allowed to do a little less business than you were. Indexing the cap to inflation fixes that without anyone having to fight for a new law.

California is the clearest example. Its two cap tiers started at $75,000 and $150,000. By January of 2025 they had climbed to $86,206 and $172,411, automatically, every January, with no new bill required.


And then there is the one that is personal to me. In Texas, the cottage food income cap was raised from $50,000 to $150,000 last year. I finished my first year of business in September of 2024 with right around $48,000 in revenue, against a $50,000 cap. I was watching that number every single market and every porch pickup week, doing the math in my head as the year closed in. I had built something in twelve months that was actually working, and the state had already decided how big it was allowed to get. There was nothing I could do about it from inside my kitchen. By the time Texas raised the cap, I had already signed the lease on my storefront, so it came a little late for me personally.


But think about what that number means for a baker where I was in 2024. Fifty thousand dollars of gross revenue is a nice side income. One hundred fifty thousand, with good margins and a tight menu, is a household income. A car payment. A mortgage payment. It is the same kitchen, the same oven, no commercial lease required. That is not a small regulatory tweak. It is a different life, available to a baker who never has to leave her house!


Do not trust a "nine states now allow refrigerated food" blog post

While I was doing this research, I kept running into the same problem. Lists like "nine states now allow refrigerated cottage food" show up on blogs, roundup sites and screenshots in Facebook groups, and nearly every single one I checked had mistakes in it. Out of date, inconsistent, sometimes just wrong.


California is a good example of why this matters. Cottage food in California is still shelf stable only, full stop. There is a separate path to sell refrigerated food from a home kitchen there, but it is a completely different permit with its own application, and it only exists in counties that choose to run the program. Depending on where you live in the state, it may not be available to you at all. Iowa works the same way: refrigerated means a separate license and a separate inspection, with its own limits.


Picture a baker in California who reads one of those roundup articles, or gets an answer from an AI tool that pulled from a pile of unverified blogs, and starts selling cheesecake under her regular cottage food registration. She did the responsible thing. She looked it up. She just pulled from a source with bad information, and now she is one complaint away from losing her ability to sell at all, without ever having done anything she thought was wrong.


Nobody writing those roundups is trying to mislead you. Cottage food law is fifty separate systems that all change on their own schedule, and a national writer cannot keep up with all fifty. It is not their fault and it is not yours, but it does mean their article cannot be your source.


So here is your homework from this episode. Set aside ten minutes once a year, put it on your calendar in January somewhere you will actually see it, and go straight to your own state's agriculture department or health department website. Not a blog, not a Google search, not ChatGPT, not a Facebook comment, not even me, since I did not personally verify all fifty states. Check three things while you are there:

  • What are you allowed to make? Is refrigerated food on the list now, and did anything else change?

  • What is your income cap, did it move this year, and is it indexed for inflation?

  • Has anything changed about where and how you are allowed to sell, including wholesale, shipping and labeling?

Your cottage food law governs more than your income cap. It governs what you make, where you sell it, and how you label it, and that last piece is the one most likely to slip past you.


Beyond your state's own site, I like forager.com for a solid national overview. Your state's cottage food Facebook group is also worth finding, search your state name plus "cottage food" and you will very likely land on one. That is where the nuance and gray areas usually get sorted out by people who have already asked the same question you have. When something is still unclear, call your local health department directly. It can feel intimidating, but in my experience they want to help you get it right, not catch you getting it wrong.


What to do when you can see your income cap coming

If you can already tell you are going to hit your state's income cap before the year is out, I want to sit across the kitchen table from you for a minute, because I was exactly there in the summer of 2024. It is a strange feeling, because it is a good problem wearing a bad problem's clothes. Your business is working. That is the whole reason it is happening.

A few things to know if this is you right now.


Your income cap may only apply to cottage food sales, not everything you earn from your knowledge. In Texas, my cottage sales were capped at $50,000, but the money I made teaching workshops was a separate category entirely, not a loophole. In my first year, a real chunk of my revenue came from workshops I taught in the spring and summer, mostly at my house and one rented local space, to groups of four to fifteen people. That income did not count toward my $50,000 cap, and it really helped fund my double oven and carried me through a summer slowdown. If you can feel your cap approaching, look into teaching. You already know how to do the thing, and there are people in your town who would pay to learn it. Just confirm workshops sit outside your own state's cap, since that varies, and your health department can answer that in one phone call.


If your cap is on gross revenue, your margin becomes the lever you actually have. Two bakers can both hit a $50,000 cap and take home very different amounts, because one of them priced with margin built in and the other did not. If your top line is limited, calculate the cost of your ingredients across your whole menu and price so that what is left after costs is enough to pay yourself well.


Hitting your cap is information, not a crisis. It means your demand has outgrown what your current setup is allowed to hold. That does not automatically mean a commercial kitchen is next. A commercial kitchen is one tool among several. You could look at a different license category in your state, a commissary kitchen, a mobile setup, a small shop. Those are genuinely different businesses with different bills, and it is worth knowing which one actually fits your life before you sign anything.


And it is also completely fine to decide that your cap is where you want to stay. If your household is not ready for a bigger operation, you can set your production to consistently land right around that number and be content there. Just because there is demand in your community does not mean growth is the only right next move for your family.


One more thing worth remembering: your income cap this year might not be your cap next year. Texas tripled its cap in the space of twelve months.


Already close to your cap? Use this as a quick gut check

If you are the baker one to three years in who is watching this number approach, sit down with these four questions before your next big push:

  • Do you know this year's exact cap for your state, and whether it moved?

  • Is any of your income, workshops, teaching, consulting, sitting outside that cap already, or could it?

  • Have you calculated the cost of your ingredients across your current menu this year, or are you still pricing off numbers from a year or two ago?

  • If you hit the cap this year, do you know which of the paths (different license, commissary, mobile, storefront, or just staying here) actually fits your household right now?


How cottage food laws actually change, and how you can help

Since 2015, thirty-four states plus Washington DC have either built a homemade food program from scratch or expanded the one they already had. None of that happened because a food safety department woke up feeling generous. It happened because home bakers organized and asked. Alabama, New Mexico, Oklahoma, California, Virginia, Texas, it is the same pattern every time.


Bakers in Minnesota formed an actual association and took their state cap from $18,000 to $78,000. Bakers in Oregon organized, got help from the Institute for Justice, and went to their state legislature to overhaul cottage baking laws that were decades out of date. Nebraska and Kentucky both passed reforms after home bakers stood up and testified in person, not attorneys, not lobbyists, bakers with flour under their fingernails describing what the law actually cost their families. Health departments in Wyoming, North Dakota and Utah report there has not been a single outbreak of foodborne illness tied to a food freedom business. Not one. That is a hard number for a legislature to argue with.

If your state is a restrictive one, here are four steps, and you do not need to do all four.


Start with one.

  1. Know your own number. This is the ten minutes of research I already gave you. If you do nothing else on this list, do this one.

  2. Find out if something is already moving. Your state legislature's website has a bill search. Type in "cottage food" and see what comes up. Somebody may already be working on this and you just have not heard about it yet.

  3. Find your state's cottage food bakers. That same Facebook group is where most of these coalitions started, a handful of tired, ready people in a group chat.

  4. If a bill gets a hearing, go tell your story. The thing that moves these bills is not expertise. It is someone willing to say out loud what her kitchen actually looks like and what the law costs her family.


Final thoughts

Cottage food law sounds like the most boring part of your business, right up until you realize it decides how big you are allowed to get, what you are allowed to make and who you are allowed to sell to. Ten minutes a year is a small price for that much control over your own business.


If you are in a restrictive state, know that these rules were not handed down from on high. People wrote them, and lately the people rewriting them are home bakers who got tired of being told no. A friend who spoke at last year's Bread Winner Summit, James Bridges, said something that has stuck with me ever since. Instead of a thousand bakeries feeding a million people each, what we need is a million bakeries feeding a thousand people each.


Every state that raises a cap or opens a new category is one more crack in the door for the next baker standing right where you are, wondering if this can actually work for her.

It does not matter whether you are selling six loaves a week or six hundred. The way the next generation buys and thinks about food is being decided right now, in kitchens just like yours, by people who started out simply making bread.


Cheering you on,

Caroline


Keep going

If this got you thinking about your own foundation and your own numbers, these three go further.


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