Homemade Butterscotch Chips: Easy, Dairy-Free Chunks for Recipes


This post is part one of this month’s Kids Can Cook section by the Hatfields. Katherine and her “mama”, Sarah, love making these homemade dairy-free butterscotch chips.

Homemade Dairy-Free Butterscotch Chips Recipe (also vegan, gluten-free, nut-free and optionally soy-free)

Butterscotch is one of our favorite flavors. Some butterscotch lollipops and hard candies are dairy-free, but it is difficult to find dairy-free butterscotch chips. Katherine found some homemade butterscotch chips recipes online and altered them to make this recipe. While these dairy-free butterscotch chips don’t hold their shape when heated the way commercial chips do, they do have that perfect butterscotch flavor. We did try to make a sturdier chip, but the resulting flavor was more “caramel” than “butterscotch.” So we went back to Katherine’s original recipe.

These homemade dairy-free butterscotch chips are great in our Dairy-Free Seven Layer Bars (recipe coming soon!), as a dairy-free ice cream topping or mix in, in no-bake treats, or blended into dairy-free milkshakes. You can also use them in other cookie recipes calling for butterscotch chips. However, they do melt when heated, and will make some unattractive, though delicious, cookies!

Young children can help measure and mix all of the ingredients, spread the butterscotch in the sheet pan with a spatula, and break the butterscotch into chips once it has cooled. A butter knife can be used instead to cut them into small, even chunks. But pouring the hot butterscotch is a job best left to teens and adults.

This recipe can be a bit finicky, as it is a homemade candy, and some dairy-free buttery spreads don’t work as well as others in this application. Even if they don’t turn out perfectly, the butterscotch chips still taste good in baked goods.

Homemade Dairy-Free Butterscotch Chips Recipe (also vegan, gluten-free, nut-free and optionally soy-free)

Special Diet Notes: Dairy-Free Butterscotch Chips

By ingredients, this recipe is dairy-free / non-dairy, egg-free, gluten-free, grain-free, nut-free, peanut-free, optionally soy-free, allergy-friendly, vegan, and vegetarian.

4.1 from 7 reviews
Homemade Butterscotch Chips
Prep time
Cook time
Total time
Our favorite dairy-free mother-daughter duo is sharing their favorite recipe for homemade butterscotch chips. Please note that the Prep time does not include refrigeration.
Serves: about 3 cups butterscotch chips
  1. Put the coconut oil, margarine, and brown sugar in a medium, stainless steel saucepan.
  2. Place the saucepan over medium-high heat, and whisk the ingredients to combine them as the oil and buttery spread melt.
  3. While continuing to whisk, bring the mixture almost to a full boil, just under 200 degrees on a candy thermometer. These two steps should take approximately 2 to 3 minutes total.
  4. Turn down the heat to a simmer, approximately 180 or 190 degrees on the candy thermometer, and continue to whisk just until the ingredients are combined and the sauce is a lighter brown color, approximately 1 to 2 minutes.
  5. Remove the saucepan from the heat, and whisk in the vanilla extract.
  6. The texture of the butterscotch sauce might still be a bit grainy from the sugar even once the ingredients are combined and the sauce has lightened in color, but it will work fine as butterscotch chips once chilled. It is more important to get the butterscotch off the heat before it overcooks and begins to separate again then to worry about the sugar completely dissolving.
  7. If the butterscotch is beginning to separate, whisk it together again.
  8. Pour the melted butterscotch onto a parchment-paper lined 9x13-inch pan.
  9. Spread the butterscotch evenly in the pan.
  10. Refrigerate the butterscotch for 3 hours.
  11. The final chips are not as firm as store bought and can easily be broken apart by hand.
  12. Break the butterscotch into small chips, or, for more uniform shapes, cut into chips with a pizza cutter or butter knife.
  13. Store the chips in an airtight container in the refrigerator.
*You can substitute cacao butter for the coconut oil to make coconut-free chips. However, the result will be more caramel-like in flavor than butterscotch, and the chips are much softer in texture.

The type of dairy-free buttery spread you use makes a difference. We had trouble with separation when we used Earth Balance sticks.

Key Ingredients & Tools: Dairy-Free Butterscotch Chips

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About Author

Sarah is the Associate Editor for Go Dairy Free. Her previous experience includes work as a copy editor at Thoroughbred Times magazine, a content writer at Travelago.com, and an intern at Mister Rogers’ Neighborhood. Sarah was a 'mom blogger' for many years but now mostly hangs out on Go Dairy Free and Instagram.


  1. Thank you so much for your recipe! I have my grandma’s Christmas fudge recipe that I have not been able to make dairy free because I could substitute for everything but the butterscotch chips. I made your chips and used them in the fudge for Christmas year and it worked beautifully!! My daughter and I, who both cannot eat dairy, were able to enjoy the fudge along with everyone else this year. Thanks!!

  2. I gave this recipe 3 stars, because while it did turn out tasty, the flavor was more like caramel not as deep as butterscotch. The recipe is easy to make and uses ingredients that are readily available (and probably in most people’s pantries). The texture is grainy due to the sugar not dissolving completely. The final product is not firm, especially in warmer weather- these butterscotch chips do not hold up well in the oven, they just melt. Not good for cookies or other baked goods, but tasty to eat on their own.

  3. I’m vegan and have been eating sweet hummus as a dessert. It’s similar to pudding but healthier. I make various flavors and have been looking for a way to make butterscotch. This recipe looks great! The only problem is that Smart Balance is NOT vegan I researched it and they source their vitamin D from sheep lanolin. I make my own vegan margarine with a refined coconut oil base. I’m hoping this will blend okay in the recipe and I’ll probably just combine with my chickpeas in the food processor right off the stove. I also make my own brown sugar with coconut sugar and molasses. Hopefully, this will work in this recipe. I found that a lot of white cane sugar is processed with bone char to make it whiter. This is especially true in the cheaper brands. Since brown sugar is just a combination of white sugar and molasses, I stopped using store-bought and started making my own. Looking forward to making this. Thanks!

  4. Thank you Sarah! Butterscotch has always been a favorite of mine. I had to give up the chips for the sake of my husband’s Celiac Disease diet. Now, I can bake those awesome Blondies again without worry! I’m in 7th Heaven over your recipe. Thank you again!!!

  5. I made these and the ‘scotch turned out more(chewy) like taffy, not hard. Is that to be expected, or did we do something wrong? The temp did get up to 225 and we thought maybe that was the reason. Do you have any insight?

    • Hi Diane, Yes, it may have been the temperature getting over 200 degrees. That’s a good guess.
      Having said that, I have also had some batches turn out chewier than others, depending on the dairy-free buttery spread or cacao butter that I used. They still tasted good, though! Keeping the chips refrigerated after they are broken into pieces helps, but they will never be as firm as store bought chips. I hope this helps. Homemade candy making certainly is finicky!

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  7. I am struggling to get the ingredients to combine in this recipe. It ends up with a thick caramel that stays separated from a lot of liquid buttery spread that won’t combine properly. What might I be doing wrong?

    • Hi Lori,

      I’m sorry you’re having trouble with the recipe. Here are a few ideas:
      The margarine you use does make a difference. When we used Earth Balance, for example, the margarine really separated from the rest of the mixture.
      In step four, cook the mixture *Just* until the sugar is dissolved, maybe even a bit less if you see things are beginning to separate.
      Whisk it all together again right before you spread it on the pan to cool.

      As I said, we did have a batch that didn’t blend very well, but after we chilled it and used it in cookies it still tasted good–even though it didn’t look very pretty!

      I hope this helps!

    • Yes, mine came out awful as well, wisked, and wisked, and wisked and sugar would not dissolve and butter would not blend in.

  8. I don’t understand why all the comments are praising this recipe. I tried this recipe twice and both times it ended in a gloopy, gross, unappealing mess of sugar-goobers. I’m not really surprised because any time I’ve mixed sugars with melted coconut oil this seems to happen.

    But then again I might just be a terrible kitchen-alchemist.
    Also, I used Earth Balance instead of Smart Balance, so it could’ve been this change as well.

    Personally, because of my experiences with this recipe, I wouldn’t recommend it if you’re in a rush or are short on ingredients (or money).

    I wish it worked out! I had an amazing butterscotch dainty planned!

    • Sorry for the delay in getting to your comment! Sarah re-tested just to make sure, and she realized that one of the instructions might be a little confusing. She said it is possible that people are cooking it too long. So she updated that with a more specific time to avoid over cooking and getting those “sugar goobers!” Sorry you had trouble with it!

  9. Sometimes the more unattractive the cookie the better 😛 What is the difference between butterscotch and caramel? I’ve never really thought about that.

    • I think traditionally butterscotch is made with brown sugar and caramel is made with white sugar. But something about using the cacao butter instead of the coconut oil made them taste more like caramel to me!

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    • HI! When testing batches, we tried one batch with cacao butter instead of coconut oil, which gave the chips a more caramel flavor. Still very good, just not what we were going for! It’s included as a coconut-free option in the recipe.

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