Michigan Cottage Food Sales Limit (2026): What Counts and How to Track It

Michigan's cottage food sales limit is $50,000 in gross sales a year, or $75,000 if you sell products priced at $250 or more per unit (think tiered wedding cakes). The limit applies per operator, counts sales before expenses, and MDARD can ask to see your records. Starting October 1, 2026, MDARD may adjust it for inflation.

The limit was raised by the 2025 amendment to the law, which took effect March 24, 2026. Here is what counts toward it, how to track it without an accountant, what to do as you get close, and how to keep growing once you outgrow the exemption.

What is the Michigan cottage food sales limit in 2026?

The higher tier is written for sellers of high-ticket items, like a Detroit baker who does multi-tier wedding cakes. The statute doesn't spell out how many of your products need to be priced at $250 or more for the higher limit to apply. If you mostly sell $4 cookies and one $250 custom order a year, don't assume the higher limit. Email MDARD at MDARD-CottageFood@michigan.gov with your ZIP code and a description of what you sell, and get the answer in writing.

What counts as "gross sales"?

Gross sales means the total amount you take in from selling cottage food, before you subtract anything. Ingredients, packaging, gas, market booth fees, card processing fees and your own time don't reduce it.

So a Grand Rapids sourdough baker who sells $40,000 of bread and spends $14,000 on flour, packaging and market fees has $40,000 in gross sales for the cap, not $26,000.

Count every channel:

• cash and card sales at farmers markets,
• porch or doorstep pickup,
• online orders, including pay-in-person orders,
• delivery and Michigan shipping orders,
• custom orders paid by check, Venmo, Zelle or similar.

The law and MDARD's guidance don't say whether separately charged delivery fees, shipping charges or tips count toward gross sales. The cautious approach is to count everything a customer pays you for an order, and to ask MDARD if the difference matters for you. The same goes for which 12-month period applies: the law says "annually" without defining the period, so a calendar year is the natural way to track, but confirm with MDARD if you're near the line.

Is the limit per person or per household?

Per person. MDARD's FAQ says that if two people in one home each run their own cottage food business, each operator can make the maximum allowable amount.

MDARD gives two examples: a parent and child who each run a cottage food business from the same home, and three roommates where two run businesses. In both cases each operator gets the full limit. Household members who aren't operators don't add anything. A family of six doesn't get six limits.

MDARD's wording is "each with a cottage food business." Two genuinely separate operations can each earn up to the limit. Splitting one business on paper to double the ceiling isn't what the FAQ describes; if you're considering a two-operator setup, ask MDARD how they'd view it before you rely on it.

Do you have to keep sales records?

Yes, in practice. MDARD's FAQ says you need to maintain sales records and provide them to an MDARD food inspector on request. The law says MDARD may request written documentation of gross sales.

There's no registration or annual filing with MDARD for cottage food, so nobody checks your total automatically. The records matter when someone asks: after a complaint, for example, or if an inspector questions whether you're still within the exemption.

Good records also serve you at tax time. Business income is reported on Schedule C, and self-employment tax applies once net self-employment earnings reach $400. Payment apps and online marketplaces are required to issue a Form 1099-K only when your payments exceed $20,000 across more than 200 transactions, but your income is taxable either way, and cash sales count toward both your taxes and the cap. The Michigan cottage food sales tax guide covers the sales tax side.

Will the limit change on October 1, 2026?

It might. Beginning October 1, 2026, and each October 1 after that, the law allows MDARD to adjust the caps for inflation using a Detroit-area consumer price index factor (based on a three-year average).

Two things to know:

1. The law says MDARD may adjust. It isn't automatic.
2. As of September 24, 2026, MDARD has not published an adjusted figure.

This page pulls the limit from one place and will show the current figure once an adjustment is published. Until then, plan around $50,000 and $75,000.

How to track your sales against the limit

You don't need accounting software. You need every sale in one place, with a running total.

1. Pick your year. Use the calendar year unless MDARD tells you otherwise.
2. Log every sale the day it happens. Date, what sold, amount, and how you were paid (cash, card, online, check).
3. Record cash immediately. Cash from a market table is the easiest to forget. Count the cash box at the end of each market and write down the total.
4. Keep a running year-to-date total and the percentage of the limit you've used.
5. Keep the backup. Payment processor reports, invoices for custom cakes, and your order history. Written documentation is what MDARD can ask for.
6. Check monthly, then weekly once you pass about three-quarters of the limit.

A simple spreadsheet works:

Ajinto's sales-cap tracker does this automatically for orders placed through your shop and lets you add sales you made elsewhere (market cash, Venmo, custom orders), so the year-to-date number reflects everything. Online ordering pauses automatically if you reach the cap.

What to do when you're getting close

Seasonal sellers hit the limit unevenly. A Dearborn cookie maker who does most of the year's business in the weeks before Eid and Christmas, for example, can go from comfortable to close in a month. When the running total gets near the line:

• Look at your margins, not just your volume. The cap is on revenue, so every dollar of sales counts the same no matter how much of it you keep. Dropping low-margin products and focusing on the ones that pay you best raises your take-home pay without adding to your gross.
• Review your prices. If your pricing hasn't kept up with ingredient costs, you're using up the cap on thin profit. See how to price baked goods.
• Plan the calendar. If you know December is your biggest month, leave room for it rather than hitting the limit in November.
• Pause or waitlist orders once you're at the line. Stop taking orders you can't fill within the limit rather than going over.
• Don't route sales through someone else. Consignment and wholesale are prohibited for cottage food, and a household member who isn't actually running their own cottage food business doesn't add to your limit.

How to grow beyond the cottage food limit

If you'll consistently sell more than the cottage food limit allows, the next step is a licensed operation. The cottage food exemption only covers food made in the kitchen of your primary residence and sold directly to consumers, so growing past it means working under a food establishment license from MDARD.

You have two main routes:

1. A licensed shared-use or incubator kitchen. You rent time in a licensed commercial kitchen instead of building your own. MDARD is clear that renting a licensed kitchen doesn't let you keep operating as cottage food: you need a food establishment license to sell food made there. Michigan State University keeps a map of Michigan incubator kitchens to help you find one near you.
2. Your own licensed facility. A licensed kitchen, whether a storefront bakery or a separate production space, built and inspected to food establishment standards.

The sales limit, the direct-to-consumer rule and the ban on wholesale are all conditions of the cottage food exemption, so they don't govern a licensed operation. What a license lets you do instead depends on the type MDARD issues. Before you commit, contact MDARD about the licensing process, and check local zoning.

For everything else about the exemption you're working under now, see the Michigan cottage food law guide and how to start a home bakery in Michigan.

Frequently asked questions

How much can you make selling cottage food in Michigan?

Up to $50,000 a year in gross sales, or $75,000 if you sell products priced at $250 or more per unit. That limit is on gross sales, not profit.

Is the Michigan cottage food limit based on profit or revenue?

Revenue. The law uses gross sales, which is everything you take in before subtracting ingredients, packaging, fees or other expenses.

Can two people in the same house each sell up to the limit?

Yes, if each person runs their own cottage food business. MDARD's FAQ says each operator in a household can earn the maximum, but household members who aren't operators don't increase anyone's limit.

What happens if I go over the cottage food sales limit?

Sales above the limit fall outside the cottage food exemption, which means you'd need a food establishment license to keep selling. If you expect to go over, contact MDARD before you do.

Does the cottage food limit go up with inflation?

The law lets MDARD adjust the caps each October 1, starting in 2026, using a Detroit-area consumer price index factor. As of September 2026, no adjusted figure has been published.

Do I have to report my cottage food sales to MDARD?

No routine reporting is required, and there's no registration with MDARD. But you must keep sales records and provide them to an MDARD inspector if asked.

This is general information, not legal advice.

Sources

• Michigan Compiled Laws 289.4102 (cottage food exemption)
• MDARD: Getting started and FAQ
• MDARD: Cottage food home
• MSU: Michigan incubator kitchen network map