On a MEHKO's profit you owe federal and California income tax plus self-employment tax, and you charge California sales tax on hot meals. MEHKO home kitchen taxes cover a Microenterprise Home Kitchen Operation, a small restaurant Los Angeles County permits in your home kitchen. You report the profit on Schedule C, the business profit-and-loss form filed with your 1040.

How is MEHKO income taxed on my 2026 federal return?

MEHKO income is self-employment income. You report meal sales and costs on Schedule C of your 2026 Form 1040, and the net profit carries both income tax and self-employment tax. If customers pay by card, the card processor sends you a Form 1099-K regardless of how many payments there are, and you report all the income whether or not a form arrives.

Self-employment tax is the Social Security and Medicare tax on your own earnings, 12.4% plus 2.9%. You owe it once your 2026 net earnings (profit after expenses) reach $400, and Schedule SE figures it at 15.3% of 92.35% of those earnings. The Social Security part stops at $184,500 of combined wages and earnings for 2026, and you deduct half of the self-employment tax on your return, which lowers your income tax but not the self-employment tax itself.

If you owe estimated tax for 2026, the last federal payment is due January 15, 2027, and the penalty is figured per payment for each day it is late. The food vendor checklist lists what to gather before filing.

Do I also pay California income tax on MEHKO profit?

The same Schedule C profit is reported on California Form 540 and taxed as income, and California estimated payments are required when you expect to owe at least $500 for 2026. The schedule is 30% by April 15, 2026, 40% by June 15, 2026, nothing in September, and 30% by January 15, 2027. The FTB's gig economy page says most independent contractors report their income on Schedule C and Form 540.

Do I charge California sales tax on MEHKO meals?

Hot MEHKO meals are taxable. California taxes hot prepared food, cold food sold to go is generally not taxable, and CDTFA's home-based guide applies the same rule to food sold from a home kitchen. Hot means prepared hot and sold warmer than the air around it, and a meal meant to be served hot stays a hot sale even if it cools in the bag. Food trucks follow the same hot and cold rule in our California sales tax post.

• One price for a hot-and-cold meal makes the whole price taxable.
• Sodas and sparkling water are always taxable; still water, juice and iced tea sold separately to go are not.
• Food eaten on-site at tables or with dishes you provide is taxable, and a MEHKO is allowed to serve on-site.

Three or more taxable sales in 12 months means you need a seller's permit, which is free. You must file a return every period even when nothing was taxable. The starting presumption under section 6091 is that every sale is taxable until you show otherwise.

In the Appeal of Fawzy, the California Office of Tax Appeals ruled against a sole proprietor who ran a food preparation and delivery business from her home in Fontana, in San Bernardino County. She was not a permitted MEHKO and not a caterer, and she claimed every sale was cold food delivered by a third party, with no records kept. Her federal income tax returns showed $728,597 more in gross receipts over three years than the sales on her sales tax returns. The opinion held that an assertion alone cannot overcome the presumption.

Keep one order log and mark each order hot or cold and to-go or on-site. That log backs your sales tax returns and doubles as the meal-and-sales record the County requires.

Which MEHKO costs can I deduct?

Most MEHKO costs are deductible. Ingredients and to-go packaging go into cost of goods sold, the Part III section of Schedule C. A small business can skip a formal year-end inventory and deduct food costs in the year the meals are handed to customers. Cookware and small wares deduct as supplies. The $597 initial application review fee and the permit fee deduct as licenses and regulatory fees, and a County subsidy waives the $597 for some lower-revenue applicants.

The general test under section 162 and Publication 334 is ordinary and necessary, meaning common and helpful for a food business. Split anything mixed between business and family, because the personal part is not deductible.

Is MEHKO income under the $100,000 cap tax-free?

Income under the $100,000 cap is fully taxable, because the 30-meals-a-day, 90-a-week and $100,000-a-year limits, adjusted each year for inflation, are Los Angeles County health-permit limits, not tax rules. County MEHKO permitting began November 1, 2024, and Pasadena, Long Beach and Vernon run their own programs. The County requires records of gross annual sales and meals sold, and the same records support your tax returns.

Can I deduct my home kitchen as a home office?

A family kitchen usually does not qualify for the home office deduction. The deduction requires a specific area used exclusively and regularly for business, occasional business use is not regular use, and a kitchen that also cooks family meals fails the exclusive-use test. Publication 587 says an area used for both business and personal purposes does not qualify. Publication 587 has no kitchen example; I apply its mixed-use rule to a family kitchen.

"I use office space and the kitchen to run my business." — a California Cottage Food Operator (not a MEHKO) on the TurboTax Community

The same split applies to you. A space used only for the MEHKO, and used regularly, can meet the exclusive-use and regular-use tests, and the family kitchen cannot. Without the deduction you generally cannot write off mortgage interest, rent, utilities, or insurance for the space.

N&T Tax & Advisory Group is based in Santa Clarita and prepares tax returns for food vendors remotely anywhere in the US; our food truck and catering accounting page describes the work. To book a meeting, use our contact page.