Do you need to collect sales tax on cottage food?
Look up your state's sales tax rules for cottage food sellers. Find out if you're exempt, what rate applies, and whether you need to register.
Understanding Sales Tax for Food Sellers
Why sales tax matters
Sales tax is a state-administered tax collected from buyers and remitted to the state government. As a seller, you're responsible for collecting the correct amount and passing it on. Most cottage food sellers are exempt from sales tax on their products, but knowing your state's rules keeps you compliant from day one.
Cottage food exemptions
Most states exempt food for home consumption from sales tax — this typically covers baked goods, jams, honey, and similar cottage food products. The key distinction is between 'unprepared' food (usually exempt) and 'prepared' food or candy (sometimes taxable). Check your state's specific definition to know where your products fall.
Marketplace facilitator laws
If you sell through a platform like Homegrown, Etsy, or Amazon, marketplace facilitator laws may require the platform to collect and remit sales tax on your behalf. This is good news for sellers — it removes the administrative burden of sales tax compliance. Homegrown handles this automatically for all sales on the platform.
What nexus means
Sales tax nexus is the legal connection between you and a state that creates a tax obligation. For cottage food sellers, you automatically have nexus in your home state because you physically operate your business there. Since cottage food laws typically require you to sell locally, most cottage food sellers only need to manage one state's rules.