What Is Considered Being Rich in Texas?

What constitutes being “rich” is a concept that varies significantly based on individual financial situations, local economic conditions, and personal expectations. In a diverse and expansive state like Texas, this perception can be particularly fluid, influenced by its unique economic landscape and varying costs of living across different regions. Understanding financial prosperity in Texas requires examining income and wealth levels, alongside crucial cost of living factors, to provide a comprehensive perspective on financial standing within the state.

Understanding Financial Metrics

Financial standing is typically assessed using two primary metrics: income and net worth. Income represents the flow of money received over a period, such as wages, salaries, business profits, or investment returns. It signifies an individual’s earning capacity and their ability to cover current expenses and generate savings.

Net worth offers a snapshot of an individual’s or household’s financial health at a specific point in time. It is calculated by subtracting total liabilities, like mortgages, loans, and credit card debt, from total assets, which include real estate, investments, retirement accounts, and cash. Both income and net worth are important for a holistic understanding of financial “richness,” as high income does not always equate to substantial wealth, nor does significant wealth necessarily imply a high current income.

Income Levels in Texas

Income serves as a primary indicator of financial prosperity, and Texas exhibits a diverse income distribution. The median household income in Texas was $79,060 as of 2023, meaning half of Texas households earned more and half earned less. This was slightly lower than the national median in 2023.

To be considered among the highest earners, a household needed an annual pre-tax income of $284,661 in 2025 to qualify as a top 5% earner. The threshold for the top 1% of earners in Texas in 2025 stood at $743,955 annually. These figures reflect varying economic opportunities and compensation structures across industries, illustrating the considerable disparity in earnings.

Wealth Levels in Texas

Wealth provides another dimension to understanding financial richness, focusing on accumulated assets rather than annual earnings. While specific percentile data for net worth across all Texans is not consistently published, general classifications offer insight into wealth tiers.

For individuals classified as “poor” in Texas, net worth is typically estimated to be between $0 and $15,000, often reflecting minimal assets or existing debt. The middle class might have a net worth ranging from $50,000 to $450,000, often including home equity and some retirement savings. An “upper-middle-class” net worth could start around $450,000 and extend up to $1 million, indicating substantial equity and a diversified investment portfolio. To be considered “rich” by net worth in Texas, individuals generally need a net worth starting around $1 million or more.

Texas is home to many millionaires and billionaires, especially in major metropolitan areas like Dallas and Houston. In 2023, 45 Texans were listed among Forbes’ 400 richest Americans, with some having net worths in the billions. This concentration of extreme wealth underscores that while a million-dollar net worth might classify one as rich, the upper echelons of wealth in Texas reach far higher levels.

Cost of Living Considerations

The actual purchasing power of income and wealth in Texas is heavily influenced by the state’s cost of living. A significant factor is the absence of a state individual income tax, which is explicitly prohibited by the Texas Constitution. This allows residents to retain a larger portion of their gross income compared to those in states with income taxes, potentially increasing disposable income.

However, Texas relies on other forms of taxation. The state levies a sales tax of 6.25%, with local jurisdictions adding up to an additional 2%, leading to a combined rate that can reach 8.25%. Property taxes are also substantial, with an average effective rate of 1.47% on owner-occupied housing value.

The overall cost of living in Texas is generally 5% to 8% lower than the national average. Housing costs, a major component, vary considerably. As of August 2023, the median home price was around $336,700, with prices ranging significantly between smaller towns and higher-cost metropolitan areas like Austin and Dallas. Average rent was approximately $1,258 per month as of August 2025, with major cities often having higher rental costs. These variations mean the same income or net worth can translate to vastly different lifestyles depending on where one resides within Texas.