Cost of Living in Texas: A Complete Guide
Last updated: March 15, 2026
The Texas Financial Picture
Texas sells itself on one headline: no state income tax. That headline is accurate, and for high earners it represents thousands of dollars per year in savings. But the full Texas financial picture includes property taxes that are among the highest in the nation, averaging about 1.6% statewide and exceeding 2% in many suburban school districts. On a $350,000 home, that is roughly $5,880 per year in property tax alone.
The overall cost of living in Texas is slightly below the national average at about 97.1, which is remarkable for a state with four of the ten largest US cities. Housing is the primary reason: the median home price statewide is roughly $300,500, well below the national median. Texas has historically kept housing affordable through permissive zoning and abundant land, though Austin has tested this model.
City by City
Austin has become the most expensive major city in Texas. The median home price of roughly $571,000 has doubled since 2018, driven by tech migration. The music, food, and culture are genuine, but the affordability that drew people here has eroded. Property taxes averaging 1.8% add roughly $10,278 per year on a median-priced home.
Dallas-Fort Worth is corporate Texas. Toyota, CBRE, McKesson, and Caterpillar have relocated headquarters here. The median home price of about $340,000 puts homeownership within reach. The metro sprawls enormously, and the suburbs offer excellent schools.
Houston is the best-kept value secret among major US metros. The fourth-largest US city has a cost of living actually below the national average, with a median home price of about $301,200. The food scene is world-class. The catch: flooding risk is genuine, the heat is oppressive, and the city sprawls enormously.
San Antonio is the most affordable major city in Texas at about 7% below the national average. The Riverwalk, the Missions, and a deep Tex-Mex food culture provide genuine quality of life. The military presence adds economic stability.
El Paso is the cheapest large city in Texas, sitting at the western tip on the Mexican border with 302 days of sunshine and a cost of living about 15% below average.
The Tax Reality
Texas funds itself without an income tax through three primary mechanisms. Property taxes average about 1.6%, the sixth-highest rate nationally. Sales tax is 6.25% state plus up to 2% local, creating combined rates of 8.25% in most cities. Mineral extraction taxes on oil and gas contribute significant state revenue.
For a household earning $100,000 and buying a $350,000 home, the annual property tax is roughly $5,880. In California, the same household would pay $5,500 to $7,000 in state income tax but only about $2,520 in property tax (on a home that would cost much more). The math depends on your income, home value, and spending patterns.
For renters, the no-income-tax advantage is clearer because property taxes are embedded in rent. For high earners renting or owning modest homes, Texas is genuinely tax-advantaged. For homeowners with expensive properties in top school districts, the property tax can offset much of the income tax savings.
Who Texas Works Best For
Texas is financially optimal for high earners who rent or own moderately priced homes. A software engineer earning $180,000 and renting a $1,800/month apartment saves roughly $10,000 to $15,000 per year compared to California. Remote workers earning coastal salaries while living in affordable Texas cities get the best of both worlds.
Retirees benefit from no income tax on retirement income but should factor property taxes into their housing budget. Use our salary calculator to run your specific scenario, and check our Texas state profile for detailed data.
The Bottom Line
Texas is big enough to contain multitudes. Austin is expensive. San Antonio is cheap. Houston is diverse. Dallas is corporate. The no-income-tax headline is true but incomplete without the property tax reality. For most Americans earning above the median and not buying the most expensive homes, Texas delivers on its financial promise.