It's no surprise so many people are flocking to the Lone Star State, and what is even more appealing is the cost of living in Texas. It's one of the more affordable places to live in the country, according to World Population Review in 2024.

If you're considering a move here, understanding the Texas cost of living is crucial. That's why we've put together this comprehensive guide. We'll break down everything from housing prices and rent costs to daily expenses like groceries, transportation, and health care. You'll discover just how financially savvy living in Texas can be.

Summary:

• Cost of Living in Texas

• Comparing Average Home Prices and Rent Costs in Texas

• Other Living Expenses in Texas

  • Grocery Shopping and Dining Out in Texas

  • Transportation Options and Fuel Costs in Texas

  • Healthcare and Insurance Costs in Texas

  • Utilities, Internet, and Phone Expenses in Texas

  • Tax Rates in the Texas Area

  • Recreation Costs in Texas

• Average Salary in Texas

• Tax Benefits for Homeowners in Texas

• Cost of Living in Texas Cities

• New Construction Housing Prices in Texas Cities

• Conclusion

Cost of Living in Texas

How much does it cost to live in Texas? Fortunately, the state has a relatively affordable cost of living compared to the rest of the country. It's known as a budget-friendly option for those looking to put down roots and construct their dream home.

In fact, the average cost of living in Texas is a solid 8% lower than the national average, according to data from the Council for Community and Economic Research (C2ER®) in September 2023. According to 2021 data from the Bureau of Economic Analysis®, the average annual cost of living in Texas per year is $45,114.

However, the cost of living in Texas can vary greatly from city to city. For instance, if you’ve got your sights set on Plano, living expenses are 32% higher than the state average and 22% higher than the national average, per C2ER’s September 2023 research. Plano is posh, which comes at a price.

If you’re seeking the cheapest city to live in Texas, Harlingen is a much more affordable option. As of 2023, C2ER finds the cost of living there is 17% below the state average and 23% less than the national average, making it a highly economical choice. 

Texas offers you the chance to live large or keep it cozy. Either way, you can enjoy the perks of the state’s lower cost of living. 

Comparing Average Home Prices and Rent Costs in Texas

Aside from low-cost living, Texas is also known for its spacious properties, where you can create your dream home without breaking the bank. On average, home prices in Texas are typically more budget-friendly compared to many other parts of the country. However, costs can vary significantly depending on the city or region.

Based on data from Redfin® in August 2023, the median home price in Texas is $351.5K. This figure reflects a subtle 0.4% uptick compared to August 2022, making the Texas housing market an enticing prospect for potential buyers. Even better, that average home price is lower than the current national median of $407K.

Overall, the average housing in Texas costs a whopping 16% lower than the national average, according to C2ER’s 2023 data. That means you can snag your dream home without overspending. 

If you’re not quite ready to commit to homeownership, renting is also a practical option in Texas. Rental costs can be considerably lower than in more expensive states. Here are the average September 2023 rents in these Texas cities, according to the Apartment List website:

• Houston, TX: $1,083 for a 1-bedroom, $1,298 for a 2-bedroom.

• San Antonio, TX: $1,050 for a 1-bedroom, $1,297 for a 2-bedroom.

• Dallas, TX: $1,216 for a 1-bedroom, $1,453 for a 2-bedroom.

• Austin, TX: $1,425 for a 1-bedroom, $1,734 for a 2-bedroom.

These costs are much lower than in higher-cost states like California or New York. This flexibility in rent allows you to get a feel for an area and its neighborhoods before taking the plunge into buying or building a home.

Other Living Expenses in Texas

Building a new home isn't just about the cost of the property; you’ll want to factor in other essential costs, too. Let's crunch some numbers in a few categories of the most common Texas living expenses. 

Grocery Shopping and Dining Out in Texas

While famous for its BBQ, Texas has a food scene as big and diverse as the state itself, catering to all tastes and budgets. 

If you enjoy dining out, you'll find a wide range of restaurants, from quirky food trucks to upscale eateries. Naturally, restaurant prices vary depending on location, type of restaurant, and more. For example, Austin is popular with foodies, so you can expect to pay about $50–$75 per person for a three-course meal at a moderately priced restaurant, reports TableAgent.com® in November 2023. Indulging in a more lavish dining experience can cost $75–$100 or even more.

Grocery shopping, a necessity for all, is generally affordable in Texas, with many options for fresh produce and pantry staples. RentCafe® finds groceries in Texas are approximately 4% cheaper than the rest of the country as of September 2023. In March 2023, Sofi® reported that, on average, a Texan spends around $289 per month per person stocking their food pantry.

Transportation Options and Fuel Costs in Texas

Texans love their cars (and trucks!), and it's a state designed for drivers. Gas prices tend to be less expensive, making commuting easier on your wallet. Per AAA®, the price for a gallon of regular unleaded gas averages $2.545 as of December 2023. 

Additionally, many Texas cities offer public transportation options, which can help cut down your overall expenses.

According to the MIT® 2023 Living Wage Calculator, annual transportation costs for Texans can range from $5,477 to $15,530, depending on household size.

Healthcare and Insurance Costs in Texas

For health care, Texas offers a mix of public and private options. Healthcare costs are highly individual, influenced by specific needs, insurance coverage, and personal choices. The cost of health insurance can vary, so it's best to do some research and find a plan that suits your needs.

Check-ups and dentistry are approximately 6% cheaper in Texas compared to the national average, as reported by C2ER in September 2023, which is good for your health and pocketbook. Depending on the household size, a Texan spends about $3,058–$9,562 annually on health care, based on MIT’s 2023 Living Wage Calculator.

Utilities, Internet, and Phone Expenses in Texas

Utility costs can sneak up on you. In Texas, they're about 3% higher than the national average, per C2ER’s 2023 data. Forbes® finds monthly utilities average $375 per month in 2023, including energy, water, natural gas, internet, and phone. So, while you might pay a tad more to keep the lights on, it's a small price to pay to live in such a low-cost state.

Tax Rates in the Texas Area

Taxes are a critical piece of the financial puzzle, and Texas residents enjoy the unique perk of paying no state income tax. That’s more money in your wallet, which can be a game-changer for homebuyers looking to maximize their budget.

That said, property taxes in Texas can vary depending on the city or county you call home. Texas primarily relies on property taxes to fund local services like schools and infrastructure. Since these rates can differ significantly from one place to another, it's worth researching the specific property tax rates in your chosen area.

Texas also offers various property tax relief programs, such as homestead exemptions, which can help ease the property tax burden for homeowners. So, while property tax rates can vary, tools are in place to make it manageable, keeping Texas an attractive destination for homeowners.

The state sales tax is 6.25%, per the Tax Foundation’s 2023 research, though that can increase to an average of 8.20% when combined with some local sales tax rates. 

Average Salary in Texas

According to Talent.com®, in 2023, the average Texan earns an annual salary of $50,550, which breaks down to $24.30 per hour. Entry-level jobs often start at $32,170 annually, per Talent.com, and employees who are more experienced can make as much as $119,438.

Overall, when comparing the average salaries and living wages, the cost of living in Texas for an individual proves to be the most appealing; however, a comfortable cost of living in Texas for a larger household is more than doable with a higher-than-average income.

Tax Benefits for Homeowners in Texas

Owning a home can be a significant expense, but it does come with its own set of financial benefits:

• Mortgage interest deduction allows most homeowners to deduct their mortgage interest payments, although the specific amount depends on your loan size, according to Forbes in June 2023. 

• Property taxes are generally deductible, reports NerdWallet® in March 2023. However, be sure you only deduct the amount you paid throughout that tax year.  

• If you have private mortgage insurance (PMI) because your loan is less than 20% of your home's value, you may be able to deduct PMI payments based on your adjusted gross income (AGI), per Forbes in June 2023. 

• If you used a home equity loan under the IRS terms of "buying, building, or substantially improving the taxpayer's home that secures the loan," you can deduct the interest payments, according to NerdWallet in November 2023. 

• As recently as 2022, the Internal Revenue Service also states there is potential for deductions on a home office and related expenses, offering some relief on those work-from-home costs.

Cost of Living in Texas Cities

Texas is a massive state, and its many cities are entirely unique and different from one another. From the bustling energy of Houston to the renowned food and music of Austin, the Lone Star State has a city for you. Let's explore the cost of living in some of the larger Texas cities:

• Cost of living in Houston, TX: Often referred to as the Space City, Houston is home to a lively atmosphere and diverse community. Houston's affordability is a big selling point, with C2ER’s 2023 data reports the cost of living here is 7% lower than the national average. Realtor.com® notes the median home price is $339.9K as of November 2023, and Apartments.com® finds the average monthly rent for an apartment is $1,143 as of December 2023.
  
  

• Cost of living in Dallas, Texas: Dallas, the heart of Texas, is known for its booming economy and rich culture. RentCafe shares that the cost of living in Dallas is 11% higher than the state average and 3% higher than the national average in 2023. The average home price in Dallas is $484.9K as of November 2023, per Realtor.com, whereas the average rent is about $1,356 as of December 2023, per Apartments.com.
  
  

• Cost of living in Austin, Texas: Austin, the state capital, is a hub of creativity, technology, and outdoor adventures. According to C2ER 2023 data, Austin's cost of living is a mere 1% higher than the national average but 10% higher than the state average. Home prices average $635K (Realtor.com, November 2023), and apartment rentals average $1,439 (Apartments.com, December 2023). While it’s a less budget-friendly option in Texas, Austin offers an appealing balance between living expenses and a high quality of life.
  
  

• Cost of Living in San Antonio, Texas: San Antonio offers a rich history, a unique blend of cultures, and a warm and welcoming lifestyle. Among the four cities in this group, San Antonio ranks as the cheapest city in Texas to live at 8% lower than the national average in 2023, as reported by C2ER. The average home price in November 2023 is about $300K, per Realtor.com, and monthly rent averages around $1,069 in December 2023, per Apartments.com. San Antonio may be the perfect fit if you’re seeking an affordable yet dynamic city. 

New Construction Housing Prices in Texas Cities

If you’re considering building your dream home in Texas, it's all about location and value. Texas cities offer several opportunities to purchase new construction homes. Let's explore the new construction housing market in a few major Texas cities:

• Home prices in Houston, TX: Explore top-quality new homes combining suburban ease with convenient access to downtown's cultural and entertainment hub. As of November 2023, our new home communities in Houston, TX, start in the lower $200Ks.
  
  

• Home prices in Dallas, TX: Dallas new construction homes offer easy access to major amenities, quality schools, and the vibrant downtown Dallas scene, boasting open floor plans and thoughtful designs for your lifestyle. As of November 2023, our new home communities in Dallas, TX, start in the upper $200Ks.
  
  

• Home prices in Austin, TX: Austin, known for its creativity and innovation, is a city that attracts dreamers and doers. As of November 2023, our new home communities in Austin, TX, start in the low $300Ks, allowing you to be a part of the Austin experience, where your budget and lifestyle align seamlessly.
  
  

• Home prices in San Antonio, TX: Find your dream home in beautiful San Antonio, Texas, with new construction homes offering open floor plans, smart home technology, and proximity to downtown San Antonio, all within a dynamic, growing community. As of November 2023, new home communities in San Antonio, TX, from Centex start in the mid $200Ks.

Conclusion

Whether you're looking for the vibrant energy of Houston or the rich culture of San Antonio, your new home awaits in Texas. With the average cost of living in Texas per year 7% lower than the national average, according to RentCafe in March 2024, and the ability to choose from remarkably unique and diverse cities, the Lone Star State is a dream come true for homebuyers. Competitive housing prices, low rent costs, and incredible tax benefits make living in Texas attainable and affordable. 

Explore new homes in Texas today or browse more Centex® blogs. 

Written By: Jordan Thomson, Freelance Writer

Last Updated: 9/25/24