How Expensive Is It to Live in Texas?

The cost of living in Texas is a significant consideration for many contemplating a move to the state. Texas is known for its general affordability, often cited as being 7% to 8% lower than the national average. This, combined with a robust job market, makes Texas an attractive destination. However, costs vary substantially by location, with major metropolitan areas typically having higher expenses than smaller cities or rural communities.

Housing Costs

Housing is the most substantial living expense, and Texas offers diverse costs influenced by location and property type. Rental prices vary considerably, with major metropolitan areas like Austin, Dallas, and Houston typically having higher averages. For example, the average rent for an apartment statewide is around $1,100 per month, while Houston’s average is closer to $1,350. A one-bedroom apartment averages about $1,146 per month, with three-bedroom units around $1,501.

Homeownership costs also reflect regional differences. The median home value across Texas was approximately $306,756 in June 2024. Cities like McAllen show lower median values, while Dallas and Houston align with the state median.

Beyond rent or purchase price, other housing expenses contribute to the overall cost. Homeowner’s insurance premiums can be higher than the national average due to the increased risk of severe weather. Many communities also require homeowners association (HOA) fees, which typically range from $150 to $400 per month.

Everyday Expenses

Daily recurring costs include food, utilities, and transportation. Groceries in Texas tend to be lower than in many other states, helping residents manage food budgets. A single person might spend approximately $280 to $289 per month on groceries, while a family of four could budget around $200 per week.

Utility costs are generally comparable to or slightly higher than the national average, with monthly bills typically ranging from $377 to $460. Electricity is a significant expense, especially during hot summer months due to high air conditioning usage. Typical monthly estimates for utilities include around $132 to $170 for electricity, $61 to $111 for natural gas, and $30 to $115 for internet. Texas’s deregulated electricity market allows consumers to choose providers, leading to competitive pricing but also potential price volatility.

Transportation expenses are often more affordable, primarily due to lower gasoline prices. Average gasoline prices in Texas typically range from $2.58 to $2.75 per gallon, consistently below the national average. Car insurance rates vary by driving history and location. Vehicle registration fees are a recurring cost, with annual totals for a typical passenger vehicle between $80 and $90. While major cities offer some public transportation, a private vehicle is often necessary for most residents.

Healthcare and Insurance

Healthcare and insurance costs are an important part of a household budget, with expenses varying based on coverage and individual needs. Health insurance premiums can be obtained through employer-sponsored plans or the Affordable Care Act (ACA) marketplace. An average monthly health insurance premium in Texas is approximately $470, with a Silver-tier plan for a 40-year-old costing around $590 per month.

Beyond premiums, out-of-pocket medical expenses like co-pays, deductibles, and prescription drug costs contribute to overall healthcare spending. These amounts depend on an individual’s insurance plan and medical needs. For those without insurance, the cost of a doctor’s visit can range significantly. A general consultation fee might be between $75 and $150, while a primary care new patient office visit could cost $174 to $248. Specialist visits can range from $150 to $500 per visit without insurance.

Texas Tax Landscape

Texas operates under a unique tax structure that influences the overall cost of living. A notable aspect is the absence of a state income tax, meaning residents are not subject to state-level taxation on their wages, retirement income, or investment earnings. This can result in considerable savings compared to states with high income tax rates.

To compensate for the lack of a state income tax, Texas has comparatively high property taxes. These are assessed annually based on the appraised value of real estate and contribute substantially to homeownership costs. The average effective property tax rate in Texas is around 1.47% to 1.83% of the home’s value. Rates are determined by local taxing entities, including counties, cities, school districts, and special districts, varying significantly by location.

Another key component is the sales tax. The state sales tax rate is 6.25%, applying to most goods and services. Local jurisdictions can impose additional sales taxes, increasing the combined rate by up to 2%. This means the total sales tax rate can be as high as 8.25% in some areas. Other taxes, such as vehicle registration fees, also contribute to the overall tax burden.