TL;DR

Texas Senate Bill 541, passed by the 89th Legislature and effective September 1, 2025, made three major changes to the state's cottage food law: it raised the annual sales cap from $50,000 to $150,000, expanded the allowed-products list to include many perishable foods (direct-to-consumer only), and created a new wholesale channel that lets you sell to other cottage food vendors. Operators selling time/temperature-controlled foods must register with DSHS, and you can now use a DSHS-assigned ID number on your label instead of your home address.

⚠️ Important disclaimer

This article is informational and is not legal or tax advice. Cottage food law changes — and county-level health departments can interpret the rules differently. Always confirm directly with the Texas Department of State Health Services or a Texas attorney before making decisions that affect your business. Last reviewed: May 2026.

I got an email last fall from a baker in Plano who'd been turning down restaurant inquiries for years because she thought it wasn't legal under cottage food law. She'd been operating under the pre-SB 541 rules — $50K cap, no perishables, direct-to-consumer only — and had no idea the whole landscape shifted September 1, 2025. By the time she figured it out, she'd left an estimated $14,000 in passed-up wholesale on the table.

That story keeps happening. Texas SB 541 is one of the biggest cottage food expansions any state has passed in the last decade — but the changes rolled out during a noisy 2025 legislative session, and a lot of working bakers either missed the update or got conflicting answers from their local health department. Let's walk through what actually changed, what it means for your business, and the compliance habits you need to build around the new rules. (For a plain-English overview of where the rules stand today, see our full Texas cottage food law guide.)

What is Texas SB 541?

Texas Senate Bill 541 is the 2025 law (passed by the 89th Legislature) that overhauled Chapter 437 of the Texas Health and Safety Code — the state's cottage food statute. It took effect September 1, 2025. The headline changes: the annual sales cap jumped from $50,000 to $150,000, perishable foods became allowed for direct-to-consumer sale, a wholesale channel opened up, and DSHS rolled out a registration system for operators selling time/temperature-controlled (TCS) foods.

What changed under SB 541

The pre-2025 Texas cottage food law was already considered one of the most permissive in the country. SB 541 went much further. Here's a clean breakdown of what's different now:

Rule	Before (pre-Sept 2025)	After SB 541 (Sept 1, 2025+)
Annual sales cap	$50,000	$150,000
Allowed foods	Limited non-perishable list	Most foods including many perishables (direct-to-consumer only for perishables)
Wholesale	Direct-to-consumer only	Wholesale to other cottage food vendors now allowed (non-TCS)
Label address	Home address required on label	Home address OR a DSHS-assigned registration number
Required disclaimer	"Made in a home kitchen, not inspected..."	"THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE THAT IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION."
Registration	None required	Required for operators selling TCS foods (begins Sept 1, 2025)
Food handler certificate	Required	Still required

The four changes that matter most for working bakers:

The sales cap tripled — $50K to $150K. This is the biggest dollar-impact change in the entire law.
Perishable foods are now allowed direct-to-consumer. Items that used to be off-limits because they required refrigeration (certain cheesecakes, cream-filled items, etc., subject to current DSHS lists) can now be sold — but only directly to the end customer, not at wholesale.
You can now wholesale to other cottage food vendors. Non-TCS foods can be sold to another cottage food operator who resells them. TCS foods cannot move through wholesale.
You can keep your home address off the label. Register with DSHS, get assigned a unique ID number, put that number on your label instead. Huge privacy improvement for bakers who didn't want their address visible to every customer.

What didn't change

Bakers get excited about SB 541 and assume everything is now fair game. It's not. These rules stayed in place:

You still cannot sell across state lines (interstate commerce requires FDA registration).
You still need a current food handler certificate from a DSHS-accredited provider (around $7-25, valid two years).
Health inspectors still cannot enter your home to inspect, but they can investigate complaints.
TCS (time/temperature-controlled-for-safety) foods cannot move through wholesale — direct-to-consumer only.
The required allergen and ingredient disclosures on labels remain.

The new labeling rules under SB 541

The biggest day-one operational change for most bakers is labels. Every product sold under cottage food law needs a label that includes:

Producer name (your business name)
Address OR DSHS registration number — your choice
Common name of the food ("sourdough country loaf" not "bread")
Net weight or volume (3 oz, 1 lb, etc.)
Complete ingredient list in descending order by weight
All major allergens clearly identified (wheat, milk, eggs, soy, tree nuts, peanuts, sesame, fish, shellfish)
The exact required disclaimer: "THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE THAT IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION."

That's the practical gotcha most bakers hit first. The label rewrite isn't optional — and the exact disclaimer wording matters (DSHS specifies it word-for-word).

How to register with DSHS (and when you have to)

Registration is required if you sell TCS (time/temperature-controlled-for-safety) foods. If you only sell shelf-stable items (most cookies, most breads, most pastries without dairy custard or meat fillings), you don't have to register — but you can choose to, just to get the registration number for your label.

If you do register, the benefits compound:

Your home address stays off every label
The DSHS number signals professionalism to wholesale buyers
You can legally sell perishable items direct-to-consumer

The Texas DSHS publishes the Cottage Food Registration Guide with the current form and process.

How to sell wholesale under SB 541 (and what's off-limits)

This is the new path most Texas bakers couldn't take before. The structure:

You can wholesale to: other cottage food vendors (a cottage food operator who will resell). Non-TCS foods only.

You cannot wholesale: TCS foods (anything requiring temperature control for safety) through any wholesale channel — those stay direct-to-consumer only.

You still need to: label every wholesale item to spec, including the DSHS disclaimer, and track every wholesale sale against your $150K cap.

Practical sequence for landing your first wholesale account:

Step 1: Confirm your product is non-TCS. Check the current DSHS allowed-foods list. If your product needs refrigeration for safety, it cannot move through wholesale.

Step 2: Rebuild your label to current SB 541 specs. This is where CrumbCoach's compliant label generator does the math — it pulls your ingredient list and allergens from each recipe, includes the exact required Texas disclaimer, and gives you the option of address or DSHS registration number.

Step 3: Get a wholesale invoice template ready. Wholesale buyers want a real invoice with your business name, contact info, and tax ID (your SSN if sole prop, EIN if you have one). They'll also want a W-9 on file.

Step 4: Track sales obsessively. Once you add wholesale on top of direct sales, the $150K cap can move faster than you expect. CrumbCoach's compliance dashboard shows your running total against the $150,000 cap in real time.

Step 5: Confirm sales tax handling. Wholesale sales to a vendor that will resell are typically exempt from sales tax (the reseller collects from the end customer). Direct sales are usually taxable for prepared foods. Talk to a Texas CPA — the penalties for getting this wrong are higher than the tax itself.

The $150,000 cap is bigger than it sounds — but plan anyway

Here's the math. $150,000/year is $12,500/month or roughly $2,884/week. That's a lot of bread. A small bakery doing 30 loaves a week wholesale at $7 each ($210/week = ~$10,920/year) only uses about 7% of the cap. You'd need around 15 active wholesale accounts at that volume — plus your direct sales — to even start sweating it.

But the cap is still real, and it sneaks up faster than you think once you add wholesale to a busy direct-to-consumer business:

Option	What it means	When to consider it
Cap your growth	Turn down new accounts to stay under $150K	If you like the lifestyle scale
Raise prices	Hit $150K with fewer units sold	If your pricing has room (most cottage bakers' does)
Move to commercial	License a commercial kitchen or co-op	If you've validated demand and want to scale further

The contrarian take: most cottage food guides will tell you to chase the cap. The reality is that most Texas cottage bakers will never come close to $150K — and that's fine. Pre-SB 541, hitting the $50K ceiling was a real and common problem. At $150K, you're effectively unlimited as a one-person operation. Don't structure your business around a ceiling you'll likely never touch; structure it around the margin and hours you actually want.

What about home bakery insurance under SB 541?

SB 541 didn't change insurance requirements at the state level — Texas still doesn't require cottage food businesses to carry liability insurance. But the wholesale buyers you're now allowed to sell to almost certainly will. Most wholesale vendors require a $1M general liability policy and a certificate of insurance (COI) naming the buyer as an additional insured.

Expect $300-$600/year for a baker-specific policy from FLIP, Food Liability Insurance Program, or similar carriers. Don't skip this — it's the cost of access to the channels SB 541 just opened.

Frequently asked questions

When did Texas SB 541 take effect?

September 1, 2025. The 89th Texas Legislature passed the bill in 2025, and registration with DSHS for operators selling time/temperature-controlled foods also began on September 1, 2025.

What is the new cottage food sales cap in Texas?

SB 541 raised the annual gross sales cap from $50,000 to $150,000. The new cap applies to all cottage food production operations in Texas as of September 1, 2025.

Do I have to register with DSHS under SB 541?

You're required to register if you sell time/temperature-controlled-for-safety (TCS) foods. If you only sell shelf-stable items, registration is optional — but registering gives you a DSHS-assigned ID number you can use on your label instead of your home address.

Can I sell wholesale to a coffee shop or grocery store under SB 541?

SB 541 specifically allows wholesale to other cottage food vendors (operators who will resell your product), and only for non-TCS foods. Sales to traditional retail stores or restaurants depend on whether the buyer qualifies as a cottage food vendor under the statute — check with DSHS or a Texas attorney before assuming a particular buyer is eligible.

What is the required label disclaimer in Texas now?

The current required disclaimer under SB 541 is: "THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE THAT IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION." It must appear on every cottage food product label, exactly as written.

CrumbCoach's Texas compliance dashboard tracks your sales against the $150,000 cap, generates SB 541-compliant labels with your DSHS registration number, and stores your food handler certificate — built for Texas cottage bakers, by people who actually read the statute.

Texas SB 541: What Changed for Cottage Bakers in 2026