Composite Index
91.5
US average = 100.0
Texas (TX) | Composite 91.5
Texas Cost of Living 2026
Texas sits at 91.5 on the 2026 cost of living index, modestly below the national average. The state has no income tax but compensates with the second-highest effective property tax in the US at 1.60%. Housing is reasonable statewide but Austin, Dallas-Fort Worth and Houston metros run well above the state average.
No state income taxProperty tax 1.60% effectiveTop energy producer (low electric)
Median Home
$298,700
2BR rent $1,320/mo
Median Income
$67,321
Household, Census ACS
Category breakdown
All 6 categories vs national average
| Category | TX index | National avg | Difference |
|---|---|---|---|
| Housing | 81.5 | 100.0 | -18.5% |
| Groceries | 93.5 | 100.0 | -6.5% |
| Utilities | 101.5 | 100.0 | 1.5% |
| Transportation | 98.5 | 100.0 | -1.5% |
| Healthcare | 95.8 | 100.0 | -4.2% |
| Miscellaneous | 95.2 | 100.0 | -4.8% |
Sources: BEA Regional Price Parities, C2ER Cost of Living Index, Census ACS 5-year (median income, home value), Texas Comptroller (sales and property tax), EIA (electricity rates), KFF (uninsured rate).
Pros / offsets
What works in Texas.
No state income tax. Texas is one of 9 no-state-income-tax states. The Texas Comptroller funds the state through sales tax (6.25% state plus up to 2% local) and property tax instead.
Cheap energy. Texas is the largest electricity producer in the US and the only state with its own grid (ERCOT). Average residential electricity rate is 13.45 cents per kWh, below the national average per EIA data.
Modest housing statewide. Median home $298,700 puts Texas mid-pack nationally despite Austin's premium. Rural and small-city Texas (Lubbock, Amarillo, McAllen) remains under $200,000 median.
Strong income. Median household income $67,321 is above the US median, with concentrated high-income clusters in Austin tech and Houston energy/medical.
Cons / drivers
Where Texas costs more.
Property tax 1.60% effective. The second-highest property tax in the US (only Illinois and New Jersey are higher). On a $400,000 home, that is $6,400/year before homestead exemptions. The Texas Comptroller maintains the assessment-and-protest process; protest deadlines are tight.
Highest uninsured rate. Texas has the highest uninsured rate in the US at 17.3% per KFF. Medicaid has not expanded, which leaves a coverage gap for low-and-middle-income Texans.
Major-metro premium. Austin housing index runs around 130 (well above state 81.5), Dallas-Fort Worth around 100-110, Houston around 95. State average masks substantial metro variance.
Sales tax stacks. 6.25% state plus up to 2% local can hit 8.25% combined. Groceries are exempt; prepared food is taxed.
Tax + benefit signals
Texas tax and access overview
State income tax
0%
No state income tax
Property tax effective
1.60%
Of assessed value, annual
Sales tax (state)
6.25%
Local can add 1-4% more
Uninsured rate
17.3%
Medicaid: not expanded
Metro variation
State averages mask city variation.
Texas state average is 91.5 but the major metros tell different stories:
Austin (Travis County): Roughly 125-135 on the regional price parity scale, driven by housing demand from tech employment growth. Median home value runs $500,000+ in many Austin metro neighborhoods.
Dallas-Fort Worth: Roughly 100-110 RPP, near the national average. The DFW housing market is reasonable for major-metro standards, with median home values in the high-$300,000s.
Houston: Roughly 95-100 RPP. Lower housing premium than Austin or DFW; energy-industry wages keep the median income strong.
San Antonio: Roughly 90 RPP, well below the state average. Lower housing costs and a substantial military-and-medical employment base.
For metro-level numbers, consult the BEA Regional Price Parities metro table directly. State averages over-represent Houston and DFW by population, under-represent border and West Texas.
Frequently Asked
Texas cost of living, answered
Does Texas really have no state income tax?
Yes. Texas is one of nine states with no state income tax (along with Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Washington and Wyoming). The Texas Constitution prohibits a state income tax without voter approval. Federal income tax still applies normally. State revenue comes from sales tax, property tax, oil and gas severance taxes, and franchise tax on businesses.
How does Texas property tax compare to other states?
Texas effective property tax is 1.60% per the Tax Foundation, the second-highest in the US after New Jersey and Illinois. On a $400,000 home, this is roughly $6,400/year. The state-mandated homestead exemption ($100,000 of school district appraised value as of 2024) lowers the bill for primary residences. Counties and school districts each levy separate property taxes; Texas Comptroller maintains the rate database.
Is Austin really that expensive compared to the rest of Texas?
Yes. Austin metro housing runs 30-50% above the Texas state average and home values in central Austin and Round Rock often exceed $500,000. The driver is tech-sector employment growth concentrating demand. San Antonio, El Paso and the Rio Grande Valley are still well below state average.
Why is the Texas uninsured rate so high?
17.3% uninsured per KFF, the highest in the US. Texas has not expanded Medicaid under the ACA, which leaves a 'coverage gap' for adults earning between Medicaid eligibility and ACA marketplace subsidies. The state's large population of undocumented residents (who are ineligible for ACA marketplace coverage by federal law) also contributes.
How does Texas grocery cost compare?
Texas grocery sub-index is 93.5, below the national average. Texas does not tax groceries (except prepared food). Combined with proximity to Mexico for produce and Texas-Gulf protein supply, grocery costs are amongst the lowest in major states. USDA Food Plans cost-of-food data is one of the inputs for benchmarking.
Is moving to Texas worth it for the tax savings?
Run the math. On a $100,000 salary moving from California (13.3% top marginal) to Texas, you save roughly $5,000-9,000/year in state income tax depending on deductions. Set against Texas property tax (1.60% vs CA 0.71% on equivalent home values) and higher healthcare costs (no Medicaid expansion), the picture is more nuanced. The /calculator page lets you run the full comparison.