Michigan Cottage Food Sales Limit: $50,000 Cap, $75,000 Tier, and CPI Adjustments

The Old Cap Is Gone

Michigan's cottage food law originally limited annual gross sales to $25,000. Public Act 51 of 2025, effective March 24, 2026, doubled that to $50,000 and introduced a second, higher tier. If you've been holding back production to stay under the old limit, the math has changed.

How the Dual-Cap System Works

The reformed law creates two sales tiers:

Standard cap: $50,000 in gross annual sales. This applies to most cottage food operations — home bakers, candy makers, granola producers, jam sellers.

High-unit-value cap: $75,000 in gross annual sales. This tier is available only when every product the operation sells is priced at $250 or more per unit. The legislature designed this for custom wedding cake decorators and artisan confectioners who produce a small number of high-value items.

The high-value tier isn't a partial exemption. You can't sell $50,000 worth of cookies and then sell $25,000 worth of wedding cakes at the higher cap. If even one product in your lineup is priced below $250, the entire operation falls under the standard $50,000 cap.

Per-Person, Not Per-Household

The sales cap is calculated per person, not per residence. Two people living in the same house can each operate their own cottage food business with separate $50,000 caps — as long as each maintains independent financial records and production logs. A husband running a bread operation and a wife running a cookie business from the same kitchen are each tracked separately.

Inflation Adjustments Start October 2026

Both caps will adjust annually for inflation beginning October 1, 2026. MDARD calculates the adjustment using a three-year average of the Detroit Consumer Price Index. The department publishes the updated figures each fall.

This means the $50,000 and $75,000 numbers aren't permanent — they'll creep upward with inflation. If the Detroit CPI averages 3% over the measurement period, the standard cap would adjust to roughly $51,500 for the following year.

Gross Sales, Not Net Profit

The cap measures gross annual sales — the total revenue before expenses. The cost of ingredients, packaging, booth fees, delivery, and every other business expense doesn't reduce the number. If you sell $50,000 worth of cookies but spent $30,000 producing them, you've hit the cap even though your profit was $20,000.

Track every sale throughout the applicable annual period.

What Happens When You Hit the Cap

Exceeding the annual sales limit instantly dissolves your cottage food exemption. At that point, continuing to sell from your home kitchen without a license violates the Michigan Food Law. The consequences can include MDARD administrative penalties, product seizure, and potential charges for distributing uninspected food.

If you're approaching the cap mid-year, you have two options: stop selling for the remainder of the applicable annual period, or start the transition to commercial licensing. The transition involves securing a licensed commercial kitchen (shared-use incubator kitchens in Michigan typically run $200–$1,000 per month), completing food manager certification, and passing a plan review.

Tracking Your Sales

Consistent record-keeping is the only way to stay under the cap with confidence. Log every transaction with the date, product sold, quantity, and price. If you sell at farmers markets, track booth-by-booth. If you sell online, your payment processor records help, but keep a parallel ledger.

The Michigan Cottage Food & Home Food Business Guide includes revenue tracking worksheets designed for the dual-cap framework, so you can monitor your position against both tiers throughout the year.

See more Michigan guides →