Texas offers a cost of living that generally falls at or slightly below the national average, making it one of the more affordable large states in the country as of 2026.
The absence of a state income tax is a meaningful financial advantage — residents keep more of their paycheck compared to high-tax states like California or New York.
However, Texas is not uniformly affordable: the Austin metro area has experienced dramatic housing cost increases over the past several years, now rivaling some coastal markets.
Dallas-Fort Worth, Houston, and San Antonio offer more balanced cost profiles, while rural Texas counties remain among the most affordable in the nation.
Texas's economy is diverse and resilient, anchored by energy, technology, healthcare, and manufacturing — driving strong employment and a steady influx of new residents.
According to BLS Southwest region CPI data, the state's overall cost index typically runs within 5% of the national average, though local variation is substantial.
Understanding where costs cluster in Texas is essential for anyone considering a move.
Cost of Living Overview
Texas's overall cost of living index typically runs within 2–5% below the national average as tracked by BLS regional CPI data for the Southwest region.[1] The MIT Living Wage Calculator estimates that a single adult in the Dallas-Fort Worth metro needs approximately $38,000–$42,000 in pre-tax income to cover basic necessities — lower than comparable estimates for California or New York.
Reviewing average net worth by age benchmarks can help Texas residents assess whether their savings are on track for long-term security.
The absence of state income tax is a significant factor for higher earners relocating from states with 5–10% income tax rates.
A household earning $120,000 per year saves approximately $6,000–$12,000 annually in state income taxes by living in Texas versus a high-tax state, depending on the origin state's rate and deductions.
However, Texas offsets this with relatively high property taxes, which rank among the highest in the nation at approximately 1.6–1.8% of assessed value annually.
Texas residents who own homes can benefit from the mortgage interest deduction to partially offset these carrying costs.
Income Needed to Live Comfortably
For most Texas metros, a single adult earning $50,000–$65,000 annually can achieve a comfortable standard of living — covering housing, transportation, food, healthcare, and modest savings.
The average salary in Texas varies significantly by industry and metro area.
A software engineer salary in Austin or Dallas typically far exceeds living cost requirements, while a teacher salary may feel strained in higher-cost urban markets.
Families of four may need $85,000–$110,000 depending on childcare costs and housing choices. The U.S. Census Bureau's American Community Survey reports Texas's median household income at approximately $67,000–$70,000, below the national median but supported by lower overall living costs.[2]
Housing Costs in Texas
Housing costs in Texas span a wide range by metro area.
HUD Fair Market Rent data for 2025–2026 shows two-bedroom FMR rates of approximately $1,150–$1,350 in San Antonio and El Paso, $1,400–$1,650 in Dallas-Fort Worth and Houston, and $1,700–$2,100 in the Austin metro — reflecting Austin's significant cost premium relative to the rest of the state.[3]
Median home prices in Texas have moderated after sharp increases during 2020–2022.
Dallas-Fort Worth median prices typically range from $360,000–$430,000, Houston from $310,000–$380,000, and Austin from $450,000–$560,000 as of 2026.
Prospective buyers should calculate the average mortgage payment at current interest rates to evaluate whether purchasing makes sense versus renting.
Understanding how much house you can afford given Texas's property tax burden is especially important here. Rural Texas markets offer home prices well below $200,000 in many areas.
Property Taxes in Texas
Texas has no state income tax but relies heavily on property taxes to fund local government and public schools.
Effective property tax rates typically range from 1.5% to 2.2% of a home's assessed value, depending on county and school district.
For a $400,000 home, this translates to approximately $6,000–$8,800 in annual property taxes — a meaningful ongoing cost that buyers must factor into their housing budget alongside mortgage payments.
Food and Grocery Costs
Grocery costs in Texas are approximately 2–5% below the national average according to BLS CPI regional data for the South region.[1] A single adult can typically expect to spend $280–$400 per month on groceries.
Texas benefits from its proximity to agricultural production in the Rio Grande Valley and Gulf Coast, keeping some produce and seafood prices competitive.
Discount grocery chains are well represented throughout the state, providing budget-conscious options.
Dining Out in Texas
Texas offers diverse and generally affordable dining options.
A typical casual restaurant meal may range from $12–$22 in most Texas cities, compared to $18–$35 in coastal California or New York metro areas.
Texas barbecue and Tex-Mex cuisines offer high-quality dining at price points accessible to most budgets.
In Austin's entertainment districts and upscale Dallas neighborhoods, fine dining costs approach national major-metro averages.
Transportation Costs
Texas is a car-dependent state by design — its vast geography and spread-out metros mean the vast majority of residents rely on personal vehicles for daily transportation.
Average annual auto insurance premiums in Texas run approximately $1,800–$2,400 for full coverage, somewhat above the national average, partly due to severe weather risks (hail, flooding) that increase claim frequency.[1]
Gas prices in Texas are typically among the lowest in the nation, often $0.20–$0.40 per gallon below the national average, benefiting from the state's oil production and relatively low gas taxes. Texas levies a gasoline excise tax of $0.20 per gallon, below the national average.
Public Transit in Texas
Dallas Area Rapid Transit (DART), Houston's METRO, and Austin's CapMetro provide public transit in major metros, but coverage is limited compared to transit-dense cities like New York or Chicago.
DART light rail serves key Dallas corridors with fares starting around $2.50 per trip.
Most Texas suburbs and exurbs are effectively not served by meaningful public transit, making vehicle ownership a practical necessity for most residents.
Healthcare Costs
Healthcare costs in Texas are a notable challenge.
Texas has one of the highest rates of uninsured residents in the nation — approximately 16–18% of the population — partly because the state has not expanded Medicaid under the Affordable Care Act.
This affects access to care and can shift costs to insured patients and providers.
For those with employer-sponsored coverage, premiums are broadly comparable to national averages.
ACA marketplace premiums for a benchmark silver plan for a 40-year-old in major Texas markets may range from $450–$650 per month before income-based subsidies.
Individuals earning 100–400% of the federal poverty level may qualify for significant premium tax credits that reduce out-of-pocket costs substantially.
Healthcare Access Across Texas
Major Texas medical centers — including the Texas Medical Center in Houston (one of the largest in the world), Baylor Scott and White in Dallas, and UT Southwestern — provide excellent specialty care.
However, rural Texas faces significant access challenges.
Many rural counties are designated Health Professional Shortage Areas by the federal Health Resources and Services Administration, with limited primary care, mental health, and specialty access.
How Texas Compares to the National Average
The following table summarizes estimated cost comparisons between Texas and national benchmarks by category as of 2026.
For comparison, the cost of living in Tennessee is another popular low-cost, no-income-tax alternative in the South, while the cost of living in Arizona is a common western comparison point.
Austin's costs are notably higher than state averages across most categories.
| Category | National Average (Index 100) | Texas Estimate | % Difference |
|---|---|---|---|
| Overall Cost of Living | 100 | 95–100 | -5% to 0% |
| Housing | 100 | 90–110 | -10% to +10% |
| Groceries | 100 | 95–98 | -2% to -5% |
| Transportation | 100 | 95–100 | -5% to 0% |
| Healthcare | 100 | 100–108 | 0% to +8% |
| Utilities | 100 | 95–105 | -5% to +5% |
Sources: BLS Southwest region CPI, U.S. Census Bureau ACS, HUD Fair Market Rents.[1][2][3]
Frequently Asked Questions
Is Texas really cheaper than California?
For most spending categories, yes — Texas is meaningfully less expensive than California. Housing costs are 40–60% lower in major Texas metros compared to coastal California markets. The absence of state income tax provides additional savings for higher earners.
However, Texas's high property taxes and higher rates of uninsured residents are important offsets to consider.
Austin has become significantly more expensive than it was a decade ago and now approaches some secondary California market price levels.
States like Florida and North Carolina also compete with Texas as affordable no-income-tax or low-tax relocation destinations.
What is the cheapest city to live in Texas?
Among Texas's larger cities, El Paso and Lubbock consistently rank among the most affordable, with median rents typically under $1,100 for a two-bedroom unit and relatively low overall cost indices.
Amarillo and Wichita Falls also offer low costs.
San Antonio provides a balance of urban amenities and affordability, while remaining significantly less expensive than Austin or Dallas's most desirable neighborhoods.
Does Texas have a state income tax?
No. Texas is one of nine states with no state income tax as of 2026.
This means that all wage, salary, and most investment income is exempt from state-level taxation.
Texas funds state government primarily through sales taxes (6.25% state rate, up to 8.25% with local additions) and property taxes, which are among the highest in the country on a percentage-of-assessed-value basis.
Those planning ahead for retirement should still review retirement savings planning strategies, as the absence of state income tax makes contributing to a Roth IRA especially straightforward for Texas residents.
How expensive is Austin compared to the rest of Texas?
Austin is substantially more expensive than other major Texas cities.
Housing costs in Austin are approximately 25–40% higher than in Houston or San Antonio, reflecting strong demand from the tech sector, a growing population, and limited housing supply relative to growth.
Rental costs for a two-bedroom apartment in Austin typically run $1,700–$2,100 per month, compared to $1,200–$1,500 in most other Texas metros as of 2026.
How do Texas utility costs compare to the national average?
Texas utility costs are approximately at or slightly below the national average overall, though electricity costs can be highly variable.
Texas operates its own largely independent power grid (ERCOT), and electricity is deregulated for most consumers, meaning rates vary by provider and plan.
The average electric bill in Texas during summer months can run significantly higher than national averages due to sustained air conditioning use.
The 2021 winter storm highlighted grid vulnerabilities that have since prompted infrastructure investment. Residents should also note the average water bill in Texas varies widely by municipality and is affected by summer irrigation demand.
Sources & References
- U.S. Bureau of Labor Statistics, Regional CPI Data — South Region (including Southwest), 2025–2026. — https://www.bls.gov/regions/southwest/news-release/consumerpriceindex_southwest.htm
- U.S. Census Bureau, American Community Survey — Texas State Profile, 2023. — https://www.census.gov/quickfacts/TX
- U.S. Department of Housing and Urban Development, FY2025 Fair Market Rents — Texas. — https://www.hud.gov/program_offices/comm_planning/affordablehousing/topics/fair_market_rents
Last updated: April 27, 2026