Sales Tax on Home-Baked Goods: A Guide for Cottage Food Sellers

A cottage food law decides whether a home baker needs a food permit. It does not decide whether the baker collects sales tax. That question belongs to the state revenue department, and the answer for a loaf of bread, a dozen cookies or a bag of candy can differ from one state to the next. Some states exempt most baked goods sold to go. Others tax food the seller made at a reduced rate or at the full rate. This guide walks through how eight states with listings on Cottage Food Directory treat these sales and links to each revenue department's own guidance.

For the other states with listings, check that state's revenue department; the state pages on this site link to the food safety rules.

Disclaimer: This article is general information, not legal or tax advice. Sources were checked on Oct. 31, 2026. Tax rules change, local rates vary and the state revenue department has the final word. Ask the department or a tax professional about a specific product or sale.

A food permit exemption is not a tax exemption

Cottage food laws say this directly. Florida's law states that the cottage food section does not exempt an operation from any state or federal tax law, rule, regulation or certificate. Georgia's cottage food law says nothing in it exempts a cottage food operator or seller from any applicable tax law. Sources: Fla. Stat. 500.80(5); O.C.G.A. 26-2-477(5).

The state law pages on this site cover the food safety side: what may be sold, labels, sales caps and where to sell. This article covers the tax side.

Five details that change the answer

The revenue department sources below turn on a handful of details about each sale.

Who made it. Several states treat food the seller mixed or baked as "prepared food," which is taxed at a higher rate than groceries.
Whether it is candy. Candy often falls outside the food exemption or reduced rate, even when cookies and bread qualify.
Whether it is sold warm. Food kept warm or reheated is taxed as hot or prepared food in several states.
Whether utensils come with it. Plates, forks and, in some states, napkins can turn an exempt sale into a taxable one.
Where it is eaten. A booth or shop with tables and chairs can make a sale look like a sale for eating on the spot.

Florida

Food products for human consumption, including baked goods, are exempt from Florida sales tax. The exemption covers bakery products sold by bakeries, pastry shops or similar businesses that have no eating facilities. It does not cover candy or similar confections, hot prepared food or bakery products sold by a business with eating facilities, unless they are sold to be eaten off the seller's premises. Source: Fla. Stat. 212.08(1).

The Florida Department of Revenue explains the details in a tax information publication. Bakery products sold while still warm from the first baking are not hot prepared food, but products kept warm by a heat source or reheated are. A seller with eating facilities is presumed to be selling for on-site eating when it sells five or fewer items, unless the packaging shows otherwise. Packaging that is glued, stapled, wrapped or sealed is an example of packaging meant for eating off the premises. Source: Florida DOR Tax Information Publication 10A01-22, Sales of Bakery Products (PDF).

Florida's general state sales tax rate is 6 percent. The department says a business must first find out whether its activity or products are subject to sales and use tax and, if they are, register to collect sales tax. Source: Florida DOR: Sales and Use Tax. The Florida cottage food law page has the food safety rules.

Texas

Texas imposes a 6.25 percent state sales and use tax, and local jurisdictions may add up to 2 percent. Source: Texas Comptroller: Sales and Use Tax.

The Texas Comptroller of Public Accounts says tax is not due on bakery items, whether whole pies or individual portions, when they are sold without plates or eating utensils. A business that does not qualify as a bakery must collect tax on bakery items sold with eating utensils or sold heated. Napkins, wax paper and foam or plastic clamshells are not eating utensils. Sources: Texas Comptroller: Restaurants and the Texas Sales Tax; Texas Comptroller: Grocery and Convenience Stores.

Candy is taxable in Texas. The Comptroller's list includes bars, drops, taffy and other confections made of natural or artificial sweeteners, plus nuts and fruits that are candied or coated with chocolate, yogurt or caramel. Source: Texas Comptroller: Grocery and Convenience Stores.

The Comptroller's online permit application is for anyone engaged in business in Texas who sells or leases tangible personal property or sells taxable services in Texas. Source: Texas Comptroller: Texas Online Tax Registration Application. The Texas cottage food law page has the food safety rules.

Georgia

Georgia exempts food and food ingredients sold to individuals for eating off the premises from state sales tax, but local sales taxes still apply. Prepared food is subject to both state and local tax. Georgia's rule defines prepared food as food heated by the seller at the seller's location, meaning the place where the sale takes place, at any time before the sale; food with two or more ingredients mixed or combined by the seller at that location; or food sold with eating utensils provided by the seller. Source: Ga. Comp. R. & Regs. 560-12-2-.104.

The rule's examples of prepared food include cakes, breads and pastries made by a retail bakery onsite and sold with or without utensils to be eaten elsewhere. Its examples of food exempt from state tax include most prepackaged or repackaged items, such as candy. Source: Ga. Comp. R. & Regs. 560-12-2-.104(4).

The rule ties prepared food to the place where the sale happens. It does not give an example of a baker who bakes at home and sells at a market or by delivery, so a Georgia home baker should ask the Georgia Department of Revenue how the rule applies to each way they sell. The department's sales and use tax page links to the Georgia Tax Center and its new business registration. Source: Georgia DOR: Sales and Use Tax. The Georgia cottage food law page has the food safety rules.

Alabama

Alabama taxes food at a reduced state rate. Under Act 2025-305, the state sales and use tax rate on food dropped from 3 percent to 2 percent on Sept. 1, 2025. The general state rate is 4 percent. Food has the same meaning it has for the federal Supplemental Nutrition Assistance Program, or SNAP: generally any food for home consumption, except alcoholic beverages, tobacco and hot foods ready to eat. Sources: Alabama DOR: State Sales and Use Tax Rate Reduced on Food Beginning September 1, 2025; Alabama DOR: Sales Tax.

Cities and counties may levy their own sales taxes, and the department posts their food rates. Source: Alabama DOR: Sales and Use Tax Rates. The Alabama cottage food law page has the food safety rules.

South Carolina

South Carolina's statewide sales and use tax rate is 6 percent, and counties may add local taxes. Source: SCDOR: Sales Tax.

Unprepared food that may be bought with SNAP benefits is exempt from the state tax when it is sold for home consumption. The exemption does not apply to local sales taxes unless the local tax law exempts it. Food sold for immediate consumption, called prepared meals or food, is taxed at the full state rate. The regulation's list includes food sold at fairs and carnivals. Its examples also show how the form of a sale matters: a coffee shop's individually sold cookies, muffins, cupcakes and brownies are taxed at the full state rate, while the same foods sold by the loaf or tray are exempt unless they are for a party at or near the shop or are delivered somewhere other than a home. Source: SCDOR Sales and Use Tax Manual, Chapter 21: Unprepared Food Exemption (S.C. Code 12-36-2120(75); S.C. Reg. 117-337) (PDF).

The South Carolina cottage food law page has the food safety rules.

Tennessee

Tennessee taxes food and food ingredients at a reduced state rate of 4 percent plus the local rate. Candy and prepared food do not get the reduced rate. They are taxed at the general state rate of 7 percent plus the local rate. Sources: Tennessee DOR: SUT-53, Food and Food Ingredients; Tennessee DOR Notice 17-21: Sales Tax on Prepared Food (PDF).

Tennessee's definition of prepared food is broad. Food is prepared food if it is sold heated or was heated by the seller, if the seller mixed two or more ingredients to make it or if the seller provides eating utensils, including napkins. The notice's own examples are cookies baked by the seller and sold at room temperature and a bakery mixing ingredients to make a cake. It lists bakery goods prepared by the seller as an example of prepared food. Source: Tennessee DOR Notice 17-21 (PDF).

The Tennessee cottage food law page has the food safety rules.

North Carolina

North Carolina exempts most food from state sales tax and applies a 2 percent local rate instead. Candy, soft drinks and prepared food are not qualifying food and are taxed at the general state and local rates. Prepared food includes two or more foods mixed or combined by the retailer, food heated by the retailer and food sold with eating utensils such as plates, forks, cups and napkins. North Carolina's definition of candy does not include any preparation that contains flour. Source: NCDOR: Food, Non-Qualifying Food, and Prepaid Meal Plans.

There is an exception for bakers. Bakery items sold without eating utensils by an artisan bakery are taxed at the 2 percent local food rate only. An artisan bakery gets more than 80 percent of its gross receipts from bakery items and has annual gross receipts, combined with related persons, of no more than $1.8 million. The law lists bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies and tortillas as bakery items. Sources: G.S. 105-164.13B(a)(4); NCDOR: Food, Non-Qualifying Food, and Prepaid Meal Plans.

A cottage seller should confirm with NCDOR whether it counts as a bakery under the artisan bakery test.

The North Carolina cottage food law page has the food safety rules.

Ohio

Ohio exempts sales of food for human consumption off the premises where it is sold. Source: Ohio Rev. Code 5739.02(B)(2). For sales tax, Ohio's definition of food leaves out alcoholic beverages, dietary supplements, soft drinks and tobacco. A sweetened drink without milk or a milk substitute and with 50 percent or less fruit or vegetable juice is a soft drink and is taxable. Source: Ohio Department of Taxation Information Release ST 2004-01, Food Definition (PDF).

The Ohio cottage food law page has the food safety rules.

Questions to ask the revenue department

A short written question to the revenue department, with the reply kept on file, can settle a gray area. Useful questions include:

Are my baked goods taxed as food, at a reduced food rate or as prepared food?
Is candy, fudge or other confection I make taxed differently from my baked goods?
Does handing out napkins, forks or plates change the tax on a sale?
Do I need to register before my first sale, and how often will I file?
Which local rate applies when I sell at a market in another city or county, or deliver an order?
Do my sales at a fair, festival or event count differently from sales at my home or a farmers market?

Keeping a record of each sale, with the date, item, price and place, makes the answers easier to apply. The same records help track a state sales cap. For booth-day paperwork, see Selling at Farmers Markets: What to Bring and What to Ask. For online orders, see Selling Cottage Food Online.

Frequently asked questions

Does a cottage food exemption mean I do not collect sales tax?

No. A cottage food exemption covers food permits, not taxes. Florida's law says the cottage food section does not exempt an operation from any state or federal tax law, and Georgia's law says it does not exempt a cottage food operator or seller from any applicable tax law. Sources: Fla. Stat. 500.80(5); O.C.G.A. 26-2-477(5).

Can I sell cookies in Texas without charging sales tax?

Generally yes, if they are sold without plates or eating utensils and are not heated. The Texas Comptroller says tax is not due on bakery items sold without plates or eating utensils, and napkins, wax paper and clamshell containers are not eating utensils. Candy is taxable. Sources: Texas Comptroller: Restaurants and the Texas Sales Tax; Texas Comptroller: Grocery and Convenience Stores.

Can I charge Tennessee's 4 percent food rate on cookies I bake?

Not under the Tennessee Department of Revenue's guidance. Cookies baked by the seller are prepared food, even when sold at room temperature, and prepared food is taxed at the general state rate of 7 percent plus the local rate. Source: Tennessee DOR Notice 17-21 (PDF).

Is candy taxed the same way as baked goods?

Not in most of these states. Candy is outside the food exemption in Florida, taxable in Texas and taxed at the general rates in North Carolina and Tennessee. Georgia's rule lists candy among its examples of prepackaged or repackaged items exempt from state tax, though local tax still applies, and its prepared food definition covers food the seller mixes or heats at the place of sale. Sources: Fla. Stat. 212.08(1)(c); Texas Comptroller: Grocery and Convenience Stores; NCDOR: Food, Non-Qualifying Food, and Prepaid Meal Plans; Tennessee DOR: SUT-53; Ga. Comp. R. & Regs. 560-12-2-.104(4).

Official sources

Find home bakers and makers in these states on the all states page, or browse Florida, Texas, Georgia, Alabama, South Carolina, Tennessee, North Carolina and Ohio.

This article is general information, not legal or tax advice. Last reviewed Oct. 31, 2026.

Sales Tax on Home-Baked Goods: How 8 States Treat Cottage Food Sales