Indiana Cottage Food Sales Limit: Is There a Revenue Cap?

The short answer: under Indiana's former HBV law, in effect through June 30, 2026, there was no annual revenue cap for home-based food vendors. Since July 1, 2026, the Homestead framework applies a $1.5 million gross annual sales cap.

The longer answer involves an outdated myth and a recent change.

The $2,500 Cap Myth

Search for Indiana cottage food sales limits and you'll still find blog posts and forum threads claiming there's a $2,500 annual cap. This was accurate before 2022 — Indiana's original cottage food framework imposed that restriction.

HEA 1149, which took effect July 1, 2022, permanently eliminated the revenue cap when it rewrote IC 16-42-5.3. The former HBV law had no annual sales limit. Zero. Any source still citing $2,500 is working from information that's at least four years old.

The Former HBV Rule: No Cap

Before July 1, 2026, your legal status as a Home-Based Vendor under IC 16-42-5.3 depended on what you sold and how you sold it — not how much. Meet the three requirements (non-TCS foods, ANSI food handler certificate, proper labeling) and you could scale as large as your home kitchen allowed without triggering commercial licensing.

This makes Indiana one of the most permissive states in the country for cottage food producers. Most states impose caps ranging from $25,000 to $75,000 annually.

What Changed on July 1, 2026: The $1.5 Million Threshold

The Homestead Food Sales Act (HEA 1424), effective July 1, 2026, introduced a gross annual sales cap for the first time since 2022 — but it's set at $1.5 million. For perspective, that's more than most standalone restaurants generate in annual revenue.

If your homestead vendor operation exceeds $1.5 million in gross annual sales, you lose the home-based exemption and must transition to a licensed commercial retail food establishment. That means county permits ($150–$800 annually), plan reviews, pre-operational inspections, and compliance with the full 410 IAC 7-26 retail food code.

For the vast majority of home food sellers — even successful ones — the $1.5 million threshold is irrelevant. It's a backstop, not a practical ceiling.

Revenue vs. Products: What Actually Triggers Commercial Licensing

Below the $1.5 million threshold, revenue rarely forces Indiana home sellers into commercial territory. What typically triggers the transition is the type of sale, not the amount:

• Wholesale — selling to grocery stores, coffee shops, boutiques, or restaurants
• Out-of-state sales — shipping across Indiana's border
• Products requiring commercial processing — items that don't qualify under either the HBV or Homestead framework

If a local bakery asks to carry your cookies, that single wholesale transaction pulls your entire operation out of the home-based exemption — regardless of whether your total annual revenue is $200 or $200,000.

The full breakdown of revenue thresholds, wholesale triggers, and the transition path from home kitchen to commercial facility is covered in the Indiana Cottage Food & Home Food Business Guide.

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