Cost of Living in Texas 2026

Texas is one of the most popular relocation destinations in the United States, and the pitch is simple: no state income tax, affordable housing, and strong job growth. For many people, it delivers. But the full financial picture is more nuanced than the headline suggests. Here is what living in Texas actually costs in 2026.

Texas Cost of Living Index: Statewide Overview

Texas's overall cost of living index is approximately 96, meaning it is about 4% below the national average. However, this statewide number hides significant variation between cities. Austin's COL exceeds the national average, while San Antonio and El Paso sit well below it.

The biggest financial advantage in Texas is clear: no state income tax. Texas is one of nine states with no individual income tax, which means you keep more of every dollar you earn. For a household earning $150,000, this saves $7,000-$12,000 annually compared to a state like California (which taxes that income at 8-9.3%).

But Texas claws back some of that savings through property taxes, which are among the highest in the nation. More on that below.

See how Texas compares to your current state using our cost of living calculator.

Cost of Living by City

Houston (COL Index: ~96)

Houston is at the national average in overall cost of living, with below-average housing costs and above-average transportation costs (it is a sprawling, car-dependent city). The median home price is approximately $310,000, and median rent for a 2-bedroom is around $1,450. Houston offers strong job markets in energy, healthcare (the Texas Medical Center is the world's largest), and aerospace.

Dallas-Fort Worth (COL Index: ~104)

The DFW metroplex has grown rapidly and its cost of living has risen to match. Median home prices are around $375,000, and 2-bedroom rents average $1,600. DFW is a major corporate headquarters hub (AT&T, ExxonMobil, American Airlines, Charles Schwab) with robust job growth and a diversified economy.

Austin (COL Index: ~112)

Austin is the most expensive major city in Texas. The tech boom has pushed median home prices to approximately $475,000, with 2-bedroom rents averaging $1,750. Austin's premium is driven by its tech sector (Tesla, Apple, Google, Meta all have major presences), vibrant culture, and limited housing supply relative to demand. It is still significantly cheaper than the Bay Area or Seattle, which is why tech workers keep moving there.

San Antonio (COL Index: ~91)

San Antonio offers genuine affordability. Median home prices sit around $275,000, and 2-bedroom rents average $1,250. The economy is anchored by military installations (Joint Base San Antonio), healthcare, tourism (the Alamo, River Walk), and growing tech and cybersecurity sectors. For families seeking affordable homeownership with good quality of life, San Antonio is one of the best values in Texas.

El Paso (COL Index: ~85)

El Paso is one of the most affordable cities in the state, with a median home price of approximately $225,000 and 2-bedroom rents around $1,000. The economy is heavily tied to Fort Bliss and cross-border trade. El Paso is an excellent choice for retirees and remote workers on modest incomes.

The Property Tax Trade-Off

Texas makes up for no income tax with high property taxes. The statewide effective property tax rate is approximately 1.6-1.8%, but many areas run 2.0-2.2% or higher when you include school district and special purpose taxes.

On a $400,000 home, you are looking at $6,400-$8,800 per year in property taxes. In California, the same home would have a property tax of roughly $4,000-$5,000 (due to Prop 13 caps), but you would be paying 9-13% state income tax on top of that.

The breakeven point depends on your income. For households earning under $75,000, the property tax hit roughly equals the income tax savings — Texas is neutral compared to income tax states. For households earning $100,000+, the income tax savings exceed the property tax premium, and the advantage grows with income.

See the full breakdown with our Texas tax calculator.

Housing Market Trends

Texas housing has appreciated significantly over the past decade but remains affordable relative to coastal metros. Key trends in 2026:

• Inventory is improving. Texas builders are adding supply faster than most states, which moderates price growth.
• Appreciation is normalizing. After 15-20% annual gains in 2021-2022, Texas homes are appreciating at 3-5% annually — healthy and sustainable.
• New construction is competitive. Builders like DR Horton, Lennar, and Meritage offer new homes at or below existing home prices in many suburban areas, giving buyers leverage.
• Insurance costs are rising. Severe weather risk (hail, wind, flooding) has pushed homeowner's insurance rates up 15-25% since 2023. Budget $2,000-$4,000/year for insurance on a standard home.

Who Texas Is Best For

Texas delivers the biggest financial win for:

• Remote workers keeping coastal salaries. Earning a San Francisco or New York salary while paying Texas housing costs and no state income tax is an enormous arbitrage. A $200,000 tech salary in Austin goes much further than the same salary in San Jose.
• High earners in any field. The no-income-tax advantage scales with income. A household earning $300,000 saves $15,000-$30,000 annually compared to California or New York.
• Families seeking affordable homeownership. Cities like San Antonio, Houston suburbs, and the DFW suburbs offer 3-4 bedroom homes under $350,000 — entry points that are impossible in most coastal markets.
• Retirees on fixed income. No state income tax means 401(k) withdrawals, pension income, and Social Security are not state-taxed. Combined with affordable housing in cities like San Antonio and El Paso, retirees stretch their savings further.

The Full Financial Picture

Texas is genuinely affordable for most people, but go in with open eyes. No state income tax is real — and it is substantial for earners above $100,000. But property taxes are high, insurance is rising, summers are brutally hot (which means high utility bills), and some areas require significant driving costs due to sprawl.

Compare your specific situation. Use our cost of living calculator to compare Texas cities to where you live now, run a relocation scenario to see the full impact, and check the city comparison tool for side-by-side data.