A Comprehensive Guide to Homemade Food Business in Texas

    Charging Taxes on Cottage Foods

     

    Some Cottage Foods are Subject to Sales Tax :

    CANDY AND SNACKS

    Candy and snack items (foods) sold in individual-sized portions or labeled as having not more than one serving or containing less than 2.5 ounces are typically taxable.

    BAKERY ITEMS

    Sales of bakery items at a place of business other than a bakery are typically taxable. Tax is not due, however, on bakery items (regardless of size, whether whole pies, for example, or individual portions) when sold non-heated, without plates or eating utensils, or without any taxable meal.

    Contact The Comptroller:

    Contact the Comptroller with all questions regarding sales tax. A seller must collect sales tax on all taxable sales. The seller is required to obtain a sales tax permit, file sales tax returns and remit the tax to the comptroller. 

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    *The information contained in this fact sheet is not intended as legal advice. Consult with your attorney or a tax professional accordingly

     

    Income Tax:

    The cottage food law has no effect on federal income tax law. Normal IRS rules apply. 

    Rendition Tax:

    Counties can require a rendition tax on your business assets and equipment; application and enforcement vary county to county.

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      PREPARED FOOD

      "Prepared food" (or food ready for immediate consumption) is typically taxable.