Michigan Cottage Food Law: The 2026 Sales Cap Is $50,000, Not $25,000
Michigan Cottage Food Law: The 2026 Sales Cap Is $50,000, Not $25,000
If you have seen $25,000 quoted as the Michigan cottage food sales limit, that number is out of date. For 2026, a cottage food operator can gross up to $50,000 a year. If your products sell for $250 or more per unit, the cap rises to $75,000. The MSU bulletin and many blogs still list $25,000, so check the date on any source before you plan around it.
This guide explains what the exemption allows, how the cap works, and what you still have to handle. It is informational content, not legal or tax advice. Confirm current rules with the agencies named below before you sell.
There Is No Michigan Cottage Food License to Apply For
Cottage food operations are exempt from Michigan Department of Agriculture and Rural Development (MDARD) licensing and routine inspection under the Michigan Food Law, MCL 289.4102. There is no application, no registration, and no fee to pay before you start selling. That is why a search for “michigan cottage food license” leads nowhere: the state does not issue one.
The exemption comes with conditions. If your operation falls outside them, you lose the exemption, so the limits below are the core of the law, not fine print.
How the 2026 Sales Cap Works
| Situation | Annual gross sales limit per cottage food operator |
|---|---|
| Standard cottage food operation | Up to $50,000 a year |
| Products sold for $250 or more per unit | Up to $75,000 a year |
- The cap is gross sales. It counts the total you take in from qualifying sales in a year, not your profit after costs.
- The cap applies per operator. If two people run cottage food operations out of the same home, each operator has their own cap, and each one needs their own records.
- The $250 threshold is per unit. If you sell several sizes or bundles, ask MDARD how the per-unit price is measured, because the answer decides which cap applies to you.
- Track it as you go. Do not wait for year end. Going over the cap takes you outside the exemption, so plan your year around the number.
Example: Two Operators, One Home
Suppose a household has two people who each run a home baking business under the exemption. One operator grosses $40,000 in standard baked goods. The other grosses $45,000 from products priced at $250 or more per unit. The household total is $85,000, but neither operator passes their own limit: the first stays under $50,000, and the second stays under $75,000. The point is that the cap is not shared across the house. It is also not a loophole. Each operator must keep separate, accurate sales records and must still meet every other condition in this guide.
What You Can Make and Where You Can Make It
The exemption is narrow about both the food and the kitchen.
- Non-potentially hazardous foods only. The exemption covers foods that do not need time and temperature control to stay safe. Many shelf-stable baked goods fall in that group. Cream-filled, custard-filled, or other perishable items often do not, so confirm any product you are unsure about with MDARD before you sell it.
- Made only in your primary residence. Production must happen in the kitchen of your primary residence. A rented commercial kitchen or a kitchen at another property is not covered by the exemption.
- No wholesale or consignment. You cannot sell to stores, restaurants, or other resellers, and you cannot leave product on consignment.
- Sales and delivery inside Michigan. Both the sale and the delivery have to stay within the state.
- Online, mail order, and third-party delivery need a conversation. These channels are allowed only if the consumer can speak with the operator. Ask MDARD what that requires in practice before you list products on a website or delivery app.
- Farmers markets may still require a license. A market can require its own license even when your home operation is exempt from state licensing. Ask the market manager, and ask MDARD, before your first booth.
Rules That Still Apply Outside the Exemption
The exemption removes state licensing and routine inspection. It does not remove other rules.
- Local zoning. Michigan has 83 counties and about 1,240 townships, and cities and villages set their own rules. Zoning for a home-based food business varies by location, so check with your city, village, or township zoning office before you start.
- Labeling. Food Law labeling rules still apply to what you sell. Compare your actual label against them before you print a run.
- Sales records. Keep records of your sales for MDARD. At minimum, log the date, product, quantity, price, buyer, and delivery method for each sale, and total the month against your cap. Confirm the record format MDARD expects with the agency.
Sales Tax: Ask Treasury Before You Sell
Sales tax may apply to cottage food sales. Whether it applies to your products, and how you should handle it, is a question for the Michigan Department of Treasury. Do not assume the answer either way. Michigan's state sales tax rate is 6%.
If Treasury tells you that you need to collect sales tax, you register for a sales tax license with Treasury. That registration is free and can arrive in as little as 7 business days. Start at michigan.gov/taxes, and see the online business registration page.
Do You Need an LLC or Other Business Entity?
No. The cottage food exemption does not require a business entity. Many operators sell under their own name as a sole proprietor, and that is the default. Two points matter here:
- If you use a business name other than your own, a sole proprietor files an assumed name certificate with the clerk of each county where you do business, under MCL 445.1. County assumed name fees for sole proprietors are set by statute and by each county clerk, so confirm the fee with yours.
- If you form an LLC, you file Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs (LARA). The filing fee is $50. The yearly Annual Statement costs $25 and is due February 15 each year, beginning the year after you form, although an LLC formed after September 30 does not owe the statement on the first February 15. An LLC filing registers the entity. It is not a license to make or sell food, and it does not replace the cottage food exemption or any local approval.
Common Mistakes to Avoid
- Planning around $25,000. That figure appears in older material. The 2026 standard cap is $50,000, and the higher $75,000 cap applies only at the per-unit price threshold.
- Treating the cap as a profit limit. The cap counts gross sales, so your costs do not reduce the number.
- Selling to a coffee shop or shop on consignment. Wholesale and consignment are outside the exemption, even for a small account.
- Baking in a rented or second kitchen. The exemption depends on your primary residence kitchen.
- Shipping out of state. Sales and delivery must stay inside Michigan.
- Looking for a license that does not exist. The exemption means no application to file, but it also means you must keep the records and follow the conditions yourself.
Your Starting Checklist
- Confirm every product is non-potentially hazardous and made in your primary residence kitchen.
- Choose your target: the $50,000 standard cap, or $75,000 if your products sell for $250 or more per unit. Confirm with MDARD how the per-unit test applies.
- Set up a sales log for each operator, and total it monthly against the cap.
- Ask your city, village, or township zoning office what applies to a home food business at your address.
- Ask the market manager whether your farmers market requires its own license.
- Ask Treasury whether sales tax applies to your products.
- Decide whether you will sell as yourself or under a business name, and file any assumed name certificate or LLC paperwork.
- Email MDARD at [email protected] with product-specific questions before you list anything for sale.
Official Resources
- MDARD cottage food questions: [email protected]
- LARA Corporations Division: michigan.gov/lara/bureau-list/cscl/corps, with the MiBusiness Registry business search and filing portal at mibusinessregistry.lara.state.mi.us
- Michigan Department of Treasury: michigan.gov/taxes
- Michigan Small Business Development Center: michigansbdc.org
When to Talk to a Professional
The cottage food rules are simple until they are not. Talk to a licensed attorney or CPA before you grow past the cap, add a second operator, sell beyond Michigan or to resellers, or take on employees. A Michigan SBDC advisor can help you sort out the options before you pay for professional time.
Disclaimer: This guide is informational content, not legal or tax advice. Caps, fees, and rules change. Confirm current requirements with MDARD, LARA, and the Michigan Department of Treasury before you sell.