Do I Charge Sales Tax on Cottage Food or Catering in Washington?

Cottage food in Washington: usually no sales tax, but yes to a permit and yes to B&O tax. Bakery items, most of what cottage food permit holders sell, are exempt from retail sales tax unless you hand the customer eating utensils with them. You still need a WSDA cottage food permit and a state business license, and you still report the income for business and occupation (B&O) tax. Catering in Washington: yes, taxable, at the venue's rate. Washington's Department of Revenue states it as plainly as any agency in the country: "The caterer must collect sales tax based on the location where the meals are served."

This article explains the rules and links the authorities that set them. It is not tax advice, your state's Department of Revenue and your accountant are the final word for your situation.

Cottage food: exempt sales, permitted kitchen

Washington's cottage food law (RCW 69.22) requires a permit from the state Department of Agriculture, including an application and a kitchen inspection, before you sell the first cookie (WSDA, Cottage Food; RCW 69.22). Sales are direct-to-consumer only, in person, inside Washington. You can take orders and money online, but the handoff must be person to person; no shipping by mail or courier, and no selling through stores, restaurants, or wholesalers (Clark County Public Health, cottage food FAQ). Annual gross sales are capped at $35,000, raised from $25,000 in 2023 (Institute for Justice, Washington). Figures current as of July 2026.

On the tax side, the news is good. The Department of Revenue's rule for bakery items: "Bakery items are exempt from retail sales tax unless the item is sold with eating utensils provided by the seller," and the exempt list runs from bread and bagels through cakes, pies, muffins, bars, and cookies (WA DOR, bakeries guide). Utensils means plates, forks, spoons, cups, and the like; "bags, boxes, and other containers or packaging used to transport bakery items" do not count. So the standard cottage sale, a sealed package handed to the buyer, collects no sales tax.

Two catches. First, savory prepared items like pizzas, quiches, and sandwiches do not qualify. Second, exempt from sales tax is not exempt from tax: businesses "must report their entire gross income under the retailing classification for Business and Occupation (B&O) tax purposes" (WA DOR, bakeries guide). B&O applies even when your sales are sales-tax-exempt.

Catering: the cleanest destination rule in the country

Washington does not make caterers guess. "The caterer must collect sales tax based on the location where the meals are served" (WA DOR, caterers and catering). Cook in Tacoma, serve in Seattle, and Seattle's combined rate goes on the invoice. The charge for the catering job, meals, equipment, decorations, and the service itself, is taxable to the client, and the caterer also owes B&O on the gross.

The practical consequence: the rate changes job by job. Combined rates move city by city and district by district, so a summer of events across the Puget Sound region is a summer of different rates, each keyed to a venue address. The state's rate lookup tool resolves any address to its combined rate; the venue's address, not your kitchen's, is the one to look up.

The Washington wrinkle: no income tax, so B&O surprises people

Operators moving from other states expect sales tax plus income tax. Washington runs sales tax plus B&O instead. B&O is owed on gross income without deductions for costs (small operators may owe little or nothing after the small business credit; ask your accountant), and it applies to cottage sellers and caterers alike. Registering with the Department of Revenue sets up both obligations at once.

FAQ

"Do I charge sales tax on cottage food in Washington?" Not on bakery items sold without utensils, which is most cottage food. Savory prepared items are taxable. Either way you need the WSDA permit, the business license, and you report the income for B&O.

"I cook in city A and serve the event in county B. Which rate do I charge?" County B's, the combined rate for the venue's address. Washington ties the caterer's sales tax to the location where the meals are served, full stop.

"My baked goods are exempt. Do I still have to register with the state?" Yes. The cottage food permit comes from WSDA, the business license from the Department of Revenue, and B&O tax is owed on gross income even when no sales tax is collected.

Where Savi Tools fits

Savi Tools looks up the sales tax rate by address on the invoice, which is precisely the motion Washington's serve-location rule demands on every job. On the Growth plan, when your client has a full address, every invoice gets the jurisdiction-accurate rate applied automatically, and every taxed invoice records the state and ZIP it was taxed for. Your dashboard keeps a running view of what you've collected, split paid vs invoiced and address-accurate vs estimated, and at filing time you (or your accountant, through their free seat) export a clean CSV: state, ZIP, taxable amount, tax collected. Savi Tools tracks and reports; it does not file or remit tax, and it does not tell you where you owe, that stays with you and your accountant. Growth is $19/month. Start free →

Savi Tools tracks and reports collected sales tax by state and ZIP. It does not file or remit tax and does not provide nexus or tax advice. Consult your accountant. Never get surprised at tax time.