Cost of living in Texas: what it really costs to live in the Lone Star State

Texas is one of the more affordable states in the nation, with a cost-of-living that is 8% cheaper than the national average. The state has no income tax, but Texans do pay high property taxes and often experience spikes in summer utility bills. Expenses may vary by region, but Insure.com data finds homeowners spend an average of $7,804 per month while renters have costs averaging $4,399 per month.

For residents, this means that while day-to-day living expenses may be lower compared to other states, strategic budgeting is still important. Housing, taxes, and seasonal utility costs can significantly impact your monthly spending, so understanding how these expenses add up is essential to making the most of Texas’ overall affordability.

How location affects your cost of living in Texas

Texas is a big state, and costs can vary depending on where you live.

“Some of the bigger cities are skewing the cost of living for the whole state,” says Krystle Cook, an Austin resident. She recently spent a week near San Angelo in West Texas and was surprised by the low prices she found there.

In July, San Angelo had a median home price of $274,000, according to a recent analysis by the Texas Real Estate Research Center. That compares to a statewide median price of $340,000 and was significantly lower than the $430,000 and $400,000 median prices of Austin and Dallas, respectively.

Whether you find Texas to be cheap or expensive may depend on if you live in a major metro area or a smaller, more rural community. However, across all markets, renters have monthly costs that are roughly half that of homeowners.

A closer look at monthly living costs in Texas

Factors such as household size can impact how much individuals pay in Texas, but generally, renters have lower average expenses. One significant reason is property taxes.

“It’s not a little bit of money,” says Hunter Kosar, president of regional logistics company Twisted Nail and a resident of Waco. “I would say it’s one of the primary reasons we don’t own a home.” Kosar estimates that property taxes would add about $800-$900 a month to his housing bill.  

Utility bills can also add significantly to household expenses, particularly during the hot summer months. Kosar says the summer cooling bill for his family’s three-bedroom, two-bath home can run around $300-$400 per month.

To make utility bills more affordable, residents may be able to purchase fixed rate plans that provide consistency or, in some areas, switch to a lower priced company. Cook says her only option is the city-owned energy provider so she simply plans for summer spikes while budgeting.

To see how costs stack up across key spending areas, here’s a breakdown of average monthly expenses for homeowners and renters in Texas.

What this means for you: The base price of housing in many Texas cities can be affordable – at least until property taxes and homeowners insurance is factored in. Summer utility bills can also be an unexpected surprise to new residents. However, these high expenses are at least partially offset by the fact that Texas does not charge a state income tax and has relatively modest grocery prices.

Deciding whether to rent or buy in Texas

If you are weighing whether to rent vs. buy, consider your budget and your family’s future goals. For instance, renting is almost always a smart choice for those who aren’t sure if they will be living in an area long-term. It provides a chance to experience a city before making a significant investment there.

While renting is cheaper, sometimes owning a home is worth the extra expense. A family in Dallas might have monthly expenses of only $4,400 if they rent, but spending $7,800 to own a home could be worthwhile if they want to live in a specific neighborhood or have their children attend certain schools.

The decision to rent or buy comes down to more than just finances. It also depends on your lifestyle and where you see yourself in the years to come. Homeownership provides stability, but it can also be expensive — so make sure you are financially and mentally ready to settle for the long term before making a purchase.

How costs compare across Texas cities

Living in Texas looks different depending on where you land.

From Austin’s vibrant urban scene to San Antonio’s family-friendly neighborhoods and El Paso’s relaxed pace, each city offers a unique cost of living and lifestyle. Below, we explore how three Texans in different life stages are budgeting, housing, and enjoying life across these diverse regions.

Austin

Ashley recently earned an MBA and landed a job in Austin. She loves the city, which has small town vibes and big city amenities. It’s a popular place to be, and Ashley loves that she’s in the middle of it all.

Still, Ashley isn’t sure whether she will live here forever. So she found a roomy apartment for $1,400 a month. At that price, it feels like a bit of a splurge, but Ashley is single and able to keep her other expenses low. She doesn’t dine out often, knows all the best thrift stores and regularly visits Austin’s public library for free entertainment.

Someday, she might want to buy a house, but with small homes running between $700,000 – $900,000 in her area, she’s not sure she’ll ever be able to afford one.

San Antonio

Josiah and Caroline have a growing family – two young children with a third on the way. The couple lived in Houston, but two years ago, Josiah was given the option to transfer to a San Antonio office for his job.

After selling their home in Houston for around $400,000, the couple spent roughly the same amount on their new home in San Antonio. Property tax rates in the two counties are similar so Josiah and Caroline are spending about the same for housing after their move.

The difference is that they have a much larger home in San Antonio. They are also spending about 10% less on utilities. Plus, the city is less congested while still offering plenty of family friendly activities for their kids, from parks and a zoo to museums and wading pools.

El Paso

Roger is a widower and a retiree. He was looking for a fresh start, and El Paso seemed like a good fit. His daughter lives in the area, and whenever he visited, he found the people there to be friendly. Roger also appreciated the sunny weather and low crime rate.

He purchased a condo for a little more than $160,000 and finds that he can comfortably live on his Social Security and pension payments. He drives a small, fuel efficient car and is a regular at the local senior center where he has taken line dancing classes and made new friends.

To reduce his energy bills, he signed up for a “time-of-day” rate program which provides lower rates during off-peak hours. Roger has learned to run his dishwasher and washing machine during those hours and raise the thermostat slightly during the peak hours.

How much money you need to live comfortably in Texas

The median household income in Texas is approximately $79,721, according to 2024 Census Bureau estimates, though your needs may vary depending on whether you rent or own a home.

Kosar says homeowners in Waco probably need household incomes of at least $250,000 if they own a home, take vacations and don’t want to worry about how much they spend at the grocery store.

On the other hand, a renter could probably get by on $50,000 to $60,000 a year if they live modestly and stay in a one-bedroom apartment, according to Kosar. That’s similar to Cook’s estimate. 

“I’d say $60,000 for renting is probably a good, comfortable spot,” she says.

Of course, how you spend your money will make a big difference in whether you can live comfortably in Texas. The 50/30/20 budgeting rule is a good guideline to ensure you aren’t spending too much. It calls for using your income in the following way:

• 50% for needed items such as housing expenses, groceries, transportation and minimum debt payments
• 30% for discretionary spending such as dining out and entertainment
• 20% for savings or additional debt payments

If you are a homeowner earning $95,000 a year, that would translate into spending the following:

• $3,958 per month for mortgage, insurance, property taxes, utilities, car payment, gas and groceries
• $2,375 per month for eating out, entertainment, travel, kids’ activities and other shopping
• $1,583 per month for savings and/or additional debt payments

Meanwhile a renter making $55,000 a year would see their budget broken down this way:

• $2,291 per month for rent, insurance, utilities, car payment, gas and groceries
• $1,375 per month for eating out, entertainment, travel, kids’ activities and other shopping
• $916 per month for savings and/or additional debt payments

What’s behind the cost of living in Texas

Some economic factors, such as inflation, are felt across the whole country. Other factors are unique to Texas. These include the following:

• Fluctuations in housing demand. Austin and other Texas metro areas were red hot in the years during and after the COVID-19 pandemic. From 2013-2023, the median home value in the state increased 72%, according to the Texas Demographic Center. More recently, though, demand has dwindled, and prices have started to decline.
• High property taxes. Texas has no state income tax which helps keep the state affordable, but that is offset by high property taxes. Homeowners pay an average effective property tax rate of 1.8% in Texas, compared to 1.1% nationwide. Tax rates vary by county and jurisdiction, with taxes on a median priced home ranging from $285 in Terrell County to $5,066 in King County.
• Climate considerations. We’ve already discussed how summer heat can significantly increase utility bills, but the weather in Texas is also causing an insurance crisis in some areas. Insurance premiums have skyrocketed in the face of increasing claims for hail and wind damage. Insurance companies are also reportedly declining to renew policies in some parts of the state.  

Overall, Texas is an affordable state, but if you are a homeowner, costs can add up. Double-check the local property taxes before making a home purchase and compare home insurance quotes to find the best price for the coverage you need.

Best places to live in Texas for lower costs

The big cities are popular for a reason, but for affordable living, look beyond Austin and Dallas. Smaller cities such as El Paso, Lubbock, Killeen and those mentioned above may provide the lifestyle you want at a price you can afford.

If you are living on a budget, look beyond the big cities and consider settling in one of these Texas communities:

• Wichita Falls. Located northwest of Dallas and near the Oklahoma border, Wichita Falls was named the most affordable place to live in Texas in 2025, according to real estate brokerage firm Redfin. Median home prices are $187,900 and the average rent for a one-bedroom apartment is a mere $793.
• San Antonio. If you are looking for a bigger city, San Antonio is a popular spot with a beautiful Riverwalk and plenty of family-friendly amenities. While not the cheapest place to live in Texas, about a third of the homes here are affordable for median-income households, Zillow says.
• Harlingen. Maybe you are looking for a smaller city. In that case, Harlingen may be worth consideration. Located in the Rio Grande Valley and near the Mexican border, Harlingen has a cost-of-living that is almost a third less than that of the U.S. It may be ideal for those who enjoy outdoor activities as it is near the beach and offers plenty of hiking, birding, golfing and fishing opportunities.

Who is most impacted by Texas’ living costs (and how to adapt)

Various demographic groups are affected by the fluctuating cost of living in Texas. Fortunately, there are ways to adjust.

• Families in suburban areas may be faced with rising property tax rates and insurance premiums. If they haven’t already, they should claim their county’s homestead exemption to reduce their property tax bill. They can also shop for more affordable insurance. If they are shopping for a new home, they may want to consider whether it would be cheaper to move to the next county over.
• Young professionals may find city living attractive but expensive. Finding a roommate is a time-tested way to cut housing costs in half. Beyond that, young workers should focus on beefing up savings to prepare for future rent hikes.
• Retirees on fixed incomes may struggle with changing utility costs. Older residents who rely on Social Security or pensions may find that summer utility spikes wreak havoc on their budgets. They should contact their utility provider to see if a budget billing plan is available to provide predictability to their monthly expenses. Shopping for a cheaper provider may also be an option in some areas.

All residents of Texas can be impacted by cost-of-living increases. The key is to anticipate how your expenses may rise and prepare for them in advance.

How to save money while living in Texas

You can almost always find ways to save money, regardless of whether you rent or own a home. Break down your current spending and compare it to the 50/30/20 budget guideline to see where you might need to cut back.

If you are looking to save money in the Lone Star State, try these strategies:

• Change up your grocery store. “We’ve got some great grocery chains in Texas,” Kosar says. H-E-B is his choice for competitive pricing.
• Contact your county tax assessor for information on property tax exemptions. Tax savings is generally available for homesteads, senior citizens and disabled homeowners.
• Weatherize your home. Sealing windows, upgrading exterior doors and installing energy efficient AC units can all save money. Your utility provider may have incentives or rebate programs as well.
• Shop secondhand. “We’ve got a lot of thrift stores that are cool,” Cook says of Austin. You don’t have to live in Austin though. Buying gently used items anywhere in the state is a smart financial move.
• Bundle your insurance coverage. Whether you have homeowner insurance or renters insurance, you can probably save money by bundling it with your car insurance.

Ultimately, saving money while living in Texas is the same as how you would save money elsewhere. Cook sums it up this way, “Be mindful of what you need vs. what you want.”

Pros and cons of living in Texas despite the costs

Like anywhere, there are pros and cons to living in Texas.

Here are three reasons we love it here:

• A strong economy and jobs market which is attracting companies such as Realtor.com, Chevron and SpaceX
• Relatively affordable housing which, despite recent increases, is still cheaper than what you might find elsewhere, especially along the coasts
• No state income tax to pay

On the other hand, there are some drawbacks to life in Texas.

• Property taxes can put homeownership out of reach for some families
• Summer heat means high utility bills and an overtaxed electrical grid
• Rents are rising in major metro areas
• Severe weather events like hurricanes, hailstorms, and tornadoes can increase insurance costs and lead to costly repairs

Final thoughts: living well in Texas comes down to planning

Texas offers something for just about everyone — big-city amenities, small-town charm, and a cost of living that beats the national average in many ways. But as we’ve seen, affordability isn’t guaranteed in every corner of the Lone Star State. Property taxes can sting, summers are scorching, and housing costs in booming cities like Austin and Houston might make homeownership feel out of reach.

Whether you’re drawn by the job market, no income tax, or wide-open spaces, thriving in Texas means understanding your budget and thinking ahead. Research your region, run the numbers, and decide what trade-offs you’re willing to make. From adjusting your thermostat during peak hours to choosing a smaller city with lower housing costs, the right plan can make Texas both affordable and enjoyable.

In the end, the best move is the one that aligns with your lifestyle, long-term goals, and financial comfort. With thoughtful planning, Texas can still deliver on its promise of opportunity, freedom, and — yes — plenty of value for your dollar.

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