Texas expands Cottage Food Industry, triples income cap for home producers

Texas lawmakers dramatically expanded the state’s cottage food industry this session, tripling income limits and creating new sales channels for home-based food producers in legislation that positions the state among the nation’s most business-friendly for small food entrepreneurs.

Senate Bill 541, which passed with overwhelming bipartisan support, raises the annual income cap for cottage food operations from $50,000 to $150,000 with automatic inflation adjustments. The legislation removes previous restrictions that limited producers to about 20 specific food items.

The bill passed unanimously in the Senate and 135-5 in the House, with Republican Sen. Angela Paxton and Democratic lawmakers joining as co-sponsors.

“This removes bureaucratic barriers that were holding back small food entrepreneurs,” supporters said during legislative debate.

Broader Production Authority

Under the new law, cottage food producers can make virtually any food except prohibited categories including meat, seafood, ice products, low-acid canned goods, cannabis products and raw milk. Previously, state law restricted producers to specific items like baked goods, candy, nuts and preserves.

The change allows home producers to explore new markets and products while maintaining safety standards for high-risk foods that require commercial licensing.

New Sales Channels

The legislation creates a “cottage food vendor” category, allowing third-party retailers to sell cottage foods at farmers markets, farm stands, food service establishments and retail stores. Previously, cottage food producers could only sell directly to consumers.

Limited wholesale sales to these registered vendors break the previous direct-sales-only restriction, potentially expanding market reach for small producers.

Cottage food vendors must register with the state health department and display prominent signs stating: “THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE THAT IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION.”

Enhanced Protections

The bill strengthens cottage food operations’ protection from local government interference. The legislation prohibits local authorities from employing anyone who knowingly tries to require illegal licenses from cottage food producers.

Local governments cannot regulate cottage food production or require licenses, permits or fees for producers selling directly to consumers or cottage food vendors.

Registration and Safety Requirements

Producers selling temperature-sensitive foods or using cottage food vendors must register with the state health department. The bill allows producers to use state-issued identification numbers instead of home addresses on labels for privacy protection.

New labeling requirements include production dates for temperature-sensitive foods and specific handling instructions. Temperature-sensitive products must include 12-point font warnings: “SAFE HANDLING INSTRUCTIONS: To prevent illness from bacteria, keep this food refrigerated or frozen until the food is prepared for consumption.”

Internet Sales

The legislation maintains restrictions on internet sales, requiring personal delivery by the producer or household members. Producers must post required labeling information on their websites before accepting payment.

Industry Impact

The changes could transform many cottage food operations from small side businesses into substantial enterprises. Texas joins a growing number of states expanding cottage food laws to support rural economic development and small business growth.

The legislation addresses food safety through continued prohibitions on high-risk items while reducing regulatory barriers for low-risk foods that don’t require temperature control.

Sampling and Donations

Cottage food producers can provide samples at any location statewide and donate non-temperature-sensitive foods for charitable events like church bake sales.

The comprehensive changes position Texas as a leader in cottage food legislation, potentially spurring similar reforms in other states while supporting rural economic development and entrepreneurship.

The Texas Department of State Health Services will develop implementing rules and registration systems before the September effective date.