New Mexico Cottage Food Sales Limit: Is There a Revenue Cap?

If you've been comparing cottage food laws across states, you've probably noticed that most impose an annual revenue cap — $25,000 in Minnesota, $90,000 in Colorado, $75,000 in Texas. New Mexico does something different: there's no sales limit at all.

No Revenue Cap Under the Homemade Food Act

The New Mexico Homemade Food Act does not impose an annual gross-sales ceiling on home food businesses. You can sell $5,000 or $500,000 worth of cottage food per year and still operate legally under the home kitchen exemption, as long as every sale meets the law's other requirements.

This makes New Mexico one of the most scalable states for home food entrepreneurs. You don't need to track revenue against a regulatory threshold, and you won't be forced into a commercial kitchen solely because your business is growing.

What Limits Do Apply

The absence of a sales cap doesn't mean there are zero boundaries. The Homemade Food Act restricts how and where you sell, not how much:

Direct-to-consumer only. Every sale must go directly to the person who will eat or use the food. You cannot sell wholesale to grocery stores, restaurants, cafes, or specialty retailers. Consignment arrangements are also off-limits.

Within New Mexico only. All transactions must stay within state borders. You can ship via USPS, UPS, or FedEx to addresses within New Mexico, but crossing state lines triggers federal food safety regulations and requires a commercial kitchen with FDA registration.

Non-TCS foods only. Your products must be shelf-stable without refrigeration. Perishable items like cream-filled pastries, fresh meat, dairy, and cut produce require a commercial facility regardless of your sales volume.

Tax Obligations Scale With Revenue

While there's no regulatory sales cap, your tax obligations increase as revenue grows. New Mexico levies a Gross Receipts Tax (GRT) on all business transactions, and home food businesses are not exempt. The combined state, county, and municipal GRT rate ranges from 5.125% to 9.4375%, depending on where your products are delivered.

As your revenue increases, you may move from semi-annual to quarterly or monthly GRT filing with the Taxation and Revenue Department through the TAP portal. A CPA becomes valuable once you're selling across multiple municipalities, since GRT is destination-based — the rate depends on the buyer's location, not yours.

When You'll Actually Outgrow the Exemption

The triggers that push a home food business into commercial territory aren't about revenue — they're about changing what you sell or who you sell to:

• Your first wholesale account. A local coffee shop wants to carry your granola, or a grocery store offers a consignment deal. Both require an NMED food processing permit and a commercial kitchen.
• Your first out-of-state order. A customer in Texas wants to buy your biscochitos online. Interstate commerce requires a commercial facility and FDA registration.
• Adding perishable products. You want to sell cheesecakes, cream pies, or fresh pasta. These TCS items require commercial-grade refrigeration and an NMED permit.
• Acidified and fermented foods. Salsas, pickles, kombucha, and similar products are prohibited under the standard unlicensed home-kitchen exemption and require a commercial kitchen, regardless of volume. Albuquerque and Bernalillo County also enforce separate local restrictions.

Comparing New Mexico to Neighboring States

New Mexico's no-cap approach stands out in the region. Arizona caps cottage food sales at $75,000 per year. Colorado allows up to $90,000. Texas permits $75,000 in gross receipts. Utah has no cap but requires a food handler permit and kitchen inspection. Oklahoma has no cap but limits sales to direct-to-consumer only (same as New Mexico).

The practical effect: New Mexico home food businesses can reinvest and grow without the compliance cliff that sellers in capped states face when they approach their limit.

For a complete breakdown of how to structure your finances, handle GRT across municipalities, and plan for the commercial kitchen transition, the New Mexico Cottage Food & Home Food Business Guide covers the full trajectory from first sale to scaling up.

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