Does the cottage food revenue cap apply to gross or net income?

The cap applies to gross revenue — the total amount collected from customers — not to your net profit after expenses. This is confirmed across all state laws that impose caps. You must track total sales, not what you take home after subtracting ingredients, packaging, and other costs.

What happens if I exceed my state's cottage food revenue cap?

Exceeding the cap without transitioning to a licensed commercial kitchen can result in fines, forced closure mid-season, or loss of your cottage food exemption. In most states the cap resets on January 1 each year, so you would need to stop selling until the new year or upgrade to a commercial license.

Which states have no cottage food revenue cap?

As of 2026, states with no annual revenue cap include Wyoming, Montana, Oklahoma, Utah, North Dakota (Food Freedom states), plus Illinois, Missouri, Tennessee, South Dakota, Georgia (effective July 2025), Indiana, Alaska, Iowa, Nebraska, Wisconsin (baked goods), South Carolina, and others. Always verify directly with your state's department of agriculture, as laws change.

Can I sell cottage food online and have it count toward my cap?

Yes — online sales count toward your annual revenue cap just like in-person sales. California specifically clarifies that product price plus shipping (but not sales tax collected) counts toward the cap. Most states that allow online sales apply the same gross revenue calculation regardless of sales channel.

How do I calculate my safe weekly earning rate to stay under the cap?

Divide your remaining cap headroom (cap minus YTD revenue) by the number of weeks left in the calendar year. That gives you the maximum you can earn per week on average. For market-day planning, divide the weekly safe max by the number of market days you attend per week.

Cottage Food Revenue Cap Pace Calculator

Know exactly how much you can still earn this year under your state's law — and your safe weekly pace to stay compliant.

Your Details

State

Laws change; always verify with your state's Dept. of Agriculture.

Year-to-Date Gross Revenue ($)

Total gross sales collected so far this calendar year (includes all channels).

Today's Date

Pre-filled to today; adjust if calculating for a past or future date.

Market / Sales Days Per Week

How many days per week you sell (farmers market, online pickup, pop-ups, etc.).

Safety Buffer (%)

Leave this % of your cap unearned as a compliance cushion (default 5%).

Your Pace & Headroom

Select your state and fill in your details to see your compliance picture.

What Is This Calculator?

The Cottage Food Revenue Cap Pace Calculator is designed specifically for home bakers, jam makers, candy sellers, and other cottage food operators who need to track their annual gross sales against their state's legal revenue limit. It tells you in seconds:

How much headroom you have left before hitting your cap
Your current annualized weekly pace and whether it keeps you safe
The estimated date you'd exhaust your cap at your current rate
A per-market-day safe maximum to earn without exceeding the limit

Unlike generic bakery pricing tools that focus on recipe cost, this calculator solves the compliance planning problem that every cottage food operator with a revenue cap faces at least once a season.

How to Use It — Step by Step

Select your state. The built-in cap is pre-filled from verified 2025–2026 law. For states with no cap, the tool will confirm that and you're done.
Enter your YTD gross revenue. This is the total amount your customers have paid you this calendar year (gross, before any expenses). Include all channels: farmers markets, online orders, home pickup, pop-ups.
Confirm today's date (auto-filled). Adjust if you're planning ahead.
Set your market days per week — how many selling days you run on average.
Adjust the safety buffer (default 5%). This reserves a small margin below your cap so one unexpectedly busy market day doesn't tip you over.
Read the results: headroom, pace, projected cap-hit date, and your per-day safe max.

The Formula Explained

All calculations are based on the calendar year running January 1 through December 31. The cap is always a gross revenue figure (total collected from customers, before expenses).

Effective cap = State cap × (1 − safety buffer %) Headroom = Effective cap − YTD revenue Weeks elapsed = Day-of-year ÷ 7 Weeks remaining = (365 − Day-of-year) ÷ 7 Weekly pace = YTD revenue ÷ Weeks elapsed Projected annual = Weekly pace × 52 Safe max / week = Headroom ÷ Weeks remaining Safe max / day = Safe max / week ÷ Market days per week Days to cap = Headroom ÷ (Weekly pace ÷ 7)

Source: cap data compiled from state departments of agriculture, the Institute for Justice cottage food reform tracker, and verified state statutes as of 2025–2026. Always confirm with your own state's current law before making business decisions.

Why Tracking Your Pace Matters

Cottage food revenue caps are gross-sales limits, not profit limits. Many bakers don't realize this until they're mid-season. A good month at a summer festival can put you unexpectedly close to — or over — the limit. The consequences range from needing to stop selling for the rest of the year to potential fines.

Tracking your pace weekly (not just checking a total at year-end) lets you:

Decide whether to slow down or speed up selling at a given market
Plan whether you need to transition to a commercial kitchen license this year
Price your remaining inventory to maximize profit within your remaining headroom
Avoid the stress of hitting your limit in November when the holiday season peaks

Frequently Asked Questions

Does the cap apply to gross revenue or net profit?

Always gross revenue — the total dollar amount your customers pay you, before subtracting any expenses such as ingredients, packaging, booth fees, or labor. This is confirmed by every state law that imposes a cap. Sales tax you collect and remit to the state is typically excluded from the cap (California explicitly states this), but the product price plus any shipping you charge does count. Never use your net profit figure to track compliance — it will understate your actual sales.

What happens if I exceed my state's revenue cap?

Going over the cap while still operating as a cottage food business means you are technically operating outside your legal exemption. In most states, you would need to stop selling cottage food products for the rest of the calendar year, or transition to a licensed commercial kitchen (which requires inspection, a food facility license, and possibly zoning compliance). Caps reset on January 1. In states that require annual renewal reporting, exceeding the cap could jeopardize your registration. While enforcement is often limited, the risk of being flagged at a farmers market or by a competitor's complaint is real.

Do online sales and shipping count toward the cap?

Yes. Online sales count the same as in-person sales. California specifically includes product price plus any shipping charge (but not sales tax collected) in the cap calculation. If you sell through your website, social media orders, or email/phone orders, all revenue from those channels must be totaled alongside your farmers market and home-pickup sales. There is no channel that is exempt from the cap calculation.

Which states have no revenue cap?

As of 2026, states with no annual revenue cap include Wyoming, Montana, Oklahoma, Utah, and North Dakota (Food Freedom states), plus Illinois, Missouri, Tennessee, Georgia (HB 398, effective July 2025), Indiana, Alaska, Iowa, Nebraska, South Carolina, South Dakota, Wisconsin (baked goods), and others. Several states recently eliminated or raised their caps: Georgia went full Food Freedom in July 2025; Michigan raised its cap to $50,000 in March 2026; Texas raised to $150,000 in September 2025. Always verify directly with your state's department of agriculture, as laws change frequently.

Does the cap reset every year?

Yes, for virtually all states the cap is an annual limit that resets on January 1. Colorado is a notable exception: its $10,000 cap applies per product type per year, not as a total across all products. Illinois limits Home Kitchen Operations (a separate tier from standard cottage food) to $1,000 per month. Always check your state's specific reset period, but January 1 is the standard for the overwhelming majority of states.

Can I form an LLC to avoid the cap?

No. The cottage food revenue cap applies to the operation, not the legal entity type. Most state laws define a cottage food operation based on where food is produced (a residential kitchen) and who the operator is, not on business structure. Forming an LLC does not allow you to reset or double your cap. Minnesota's 2025 law notably expanded eligibility to small two-person LLCs co-owned by cohabitating individuals, but the cap still applies to the total operation. If you need higher revenue, the path is transitioning to a licensed commercial kitchen facility.

How accurate is the built-in state cap data?

The cap data is compiled from verified state statutes, the Institute for Justice cottage food reform tracker, and state department of agriculture sources as of 2025–2026. However, cottage food laws are among the most frequently amended consumer protection laws in the US — more than 34 states have changed their laws since 2015. Always confirm the current cap with your state's official source before making business decisions. A link to the IJ tracker is provided in the formula section above.

Disclaimer: This calculator provides estimates for planning and guidance only. It is not legal advice. Cottage food laws vary by state and change frequently. Always verify your state's current revenue cap with your state's Department of Agriculture or equivalent regulatory body before making business decisions. Cap figures shown are based on publicly available data as of 2025–2026 and may not reflect recent legislative changes. Consult a licensed attorney for legal advice about your specific situation.