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

Cottage food: in California, most cottage food sales are not subject to sales tax, because sales of cold food products sold to go for consumption off premises are generally exempt (CDTFA Regulation 1603). Cookies, breads, jams, and other shelf-stable cottage foods handed over cold and eaten elsewhere typically qualify. Catering: the opposite answer. California taxes the entire catering charge, food and labor together, and mandatory service charges are taxable while genuinely voluntary tips are not (CDTFA Tax Guide for Caterers; Pub 115).

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 in California: usually exempt, with two things to check

California cottage food operations come in two classes. Class A sells directly to consumers only. Class B can also sell indirectly, through permitted restaurants, licensed grocery stores, and food trucks, after a home kitchen inspection (LA County Public Health, Class B CFO). Those are health-permit categories, not tax categories, but they define how and where you sell.

For sales tax, what matters is the food's condition and where it gets eaten. Cold food sold to go for consumption off premises is generally exempt, and the cottage food list is built from non-potentially-hazardous items sold unrefrigerated, so the typical cottage sale, a cold loaf handed across a market table, carries no sales tax. Two things can flip that. Sell hot food, or sell cold food "in a form suitable for consumption on the seller's premises" when the 80-80 thresholds apply (more than 80 percent of receipts from food, more than 80 percent of food sales taxable) (Reg 1603). Most cottage operators never hit that combination; a stall with tables and ready-to-eat servings might.

Catering in California: the whole invoice is in

The CDTFA is direct about it: "Charges to your customers for the preparation and serving of food and beverages are taxable," and tax also applies to charges for tableware, linens, tables, and even event coordination fees when they relate to furnishing the meal (CDTFA caterers guide, industry topics). Regulation 1603 says tax applies to "the entire charge made by caterers for serving meals, food, and drinks," including the labor of serving them.

Tips are the one clean split. "An optional payment designated as a tip, gratuity, or service charge is not subject to tax," while "a mandatory payment designated as a tip, gratuity, or service charge is included in taxable gross receipts" (CDTFA Pub 115). If your contract adds an automatic 20 percent, that line is taxable. If the client writes in a tip on their own, it is not.

The local wrinkle: district taxes stack on top

As of July 2026, California's statewide base rate is 7.25 percent, and districts add voter-approved taxes ranging from 0.10 to 2.00 percent on top, so the combined rate depends on location (CDTFA rates page). California sources the state and core local portions to the seller, but district taxes layer in by where the goods go, which is why a caterer working across county lines should look up the combined rate for the event address with CDTFA's Find Your Tax Rate tool rather than assume their home-city rate travels with them.

FAQ

"Are service charges by catering companies subject to California sales tax?" If the charge is mandatory, yes. If it is a genuinely optional payment the customer chooses to add, no (Pub 115).

"Do you charge sales tax as a personal chef in CA?" (asked verbatim on ChefTalk) Generally yes when you are furnishing and serving meals, because California treats that as catering and taxes the entire charge including labor (Reg 1603). The details turn on who buys the groceries and how the arrangement is structured, so confirm your setup with the CDTFA or your accountant.

"Do I need to charge sales tax for cottage food sales?" In California, usually not, because cold food sold to go is exempt. Watch the exceptions above, and remember the cottage food permit does not settle the tax question by itself.

Where Savi Tools fits

Savi Tools looks up the sales tax rate by address on the invoice, so a catering job two districts over gets that address's rate, not your home city's. 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.