Is Texas really tax-free?

Texas has no state income tax, which saves most households $3,000-$15,000+ per year compared to states like California or New York. However, Texas has the 6th highest property tax rate in the nation (approximately 1.60%), which means homeowners pay significantly more in property taxes. On a $400,000 home, you'd pay roughly $6,400/year in property taxes — more than double the national average.

Which Texas city is the most affordable?

San Antonio is the most affordable major Texas city, with a median home price around $275,000 and cost of living index of 87. El Paso is even cheaper (85 index). Austin was once affordable but now has median home prices around $450,000 and a COL index over 100.

Is Austin still worth moving to?

Austin remains attractive for tech workers earning above-median income — no income tax on a $150K+ salary saves $7,000-$12,000 vs. California. However, housing costs have more than doubled since 2015, traffic is severe, and the COL advantage over coastal cities has shrunk significantly.

Living in Texas: Income, Housing, Taxes & Cost of Living (2026)

Texas is the largest no-income-tax state in the Sun Belt, and it’s attracted more domestic migrants than any other state since 2020. The financial appeal is straightforward: zero state income tax, affordable housing (relative to coastal states), and a massive, diversified economy spanning energy, tech (Austin), healthcare, defense, and finance (Dallas, Houston). The catch is property taxes — at 1.60% average (and over 2% in many counties), Texas has some of the highest in the nation, and they’re the primary mechanism for funding schools and local government. Sales tax is also moderately high (6.25% state + up to 2% local). Texas works best for high-income W-2 earners who benefit most from the no-income-tax structure, and for families seeking affordable homeownership in the suburbs of Austin, Dallas, Houston, or San Antonio.

Texas at a Glance

Metric	Value	National Rank
Population (2024)	30.5 million	2nd
Median household income	$73,035	Average
Median home price	$300,000	Average
Cost of living index	92	Below average
State income tax	None	N/A
Sales tax	6.25% (+ local up to 2%)	Average
Property tax (effective rate)	1.60%	6th highest

Income and Housing by Major Metro

Houston (4th largest US city)

Area	Median Income	Median Home Price	Median Rent (2BR)
Houston (city)	$62,000	$290,000	$1,350
The Woodlands	$125,000	$440,000	$1,800
Sugar Land	$110,000	$390,000	$1,650
Katy	$100,000	$350,000	$1,550
Pasadena	$52,000	$220,000	$1,100

Dallas-Fort Worth

Area	Median Income	Median Home Price	Median Rent (2BR)
Dallas (city)	$60,000	$330,000	$1,450
Fort Worth	$62,000	$310,000	$1,350
Plano	$105,000	$450,000	$1,700
Frisco	$135,000	$520,000	$1,900
McKinney	$100,000	$410,000	$1,600
Arlington	$62,000	$280,000	$1,250

Austin

Area	Median Income	Median Home Price	Median Rent (2BR)
Austin (city)	$82,000	$450,000	$1,650
Round Rock	$92,000	$400,000	$1,550
Cedar Park	$105,000	$460,000	$1,650
San Marcos	$45,000	$290,000	$1,200

San Antonio

Area	Median Income	Median Home Price	Median Rent (2BR)
San Antonio	$58,000	$275,000	$1,200
New Braunfels	$72,000	$340,000	$1,350
Boerne	$90,000	$420,000	$1,550

Other Cities

City	Median Income	Median Home Price	Median Rent (2BR)
El Paso	$52,000	$220,000	$950
Corpus Christi	$55,000	$240,000	$1,050
Lubbock	$55,000	$225,000	$1,000
Midland/Odessa (oil)	$85,000	$300,000	$1,200

The Property Tax Reality

Texas’s “no income tax” advantage is partially offset by high property taxes:

Property Tax by County

County/Area	Effective Rate	Tax on $400K Home
Harris (Houston)	1.82%	$7,280
Dallas	1.70%	$6,800
Travis (Austin)	1.48%	$5,920
Bexar (San Antonio)	1.55%	$6,200
Collin (Plano/Frisco)	1.65%	$6,600
Fort Bend (Sugar Land)	1.88%	$7,520

No Income Tax: Real Savings by Income

Gross Income	TX Tax Saved vs. CA	TX Tax Saved vs. NY	TX Property Tax on $400K Home	Net Savings vs. CA
$75,000	$4,900	$3,750	$6,400	-$1,500 (CA wins)
$100,000	$7,200	$5,400	$6,400	+$800
$150,000	$12,500	$8,900	$6,400	+$6,100
$200,000	$18,100	$12,600	$6,400	+$11,700
$300,000	$29,500	$21,000	$6,400	+$23,100

Key insight: Texas’s no-income-tax advantage is minimal below $100K if you own a home. The real savings kick in for higher earners.

Austin: The Affordability Erosion

Year	Austin Median Home Price	Growth
2015	$220,000	—
2019	$310,000	+41%
2021 (peak)	$500,000	+61%
2024	$450,000	-10% from peak
2015→2024	—	+105%

Texas Cost-of-Living Comparison

Metro	COL Index	Median Home Price	Affordability Rating
San Antonio	87	$275,000	Very affordable
El Paso	85	$220,000	Very affordable
Houston	91	$290,000	Affordable
Dallas-Fort Worth	93	$320,000	Affordable
Austin	103	$450,000	Average (no longer cheap)
Frisco/Plano	108	$480,000	Above average

Texas Pros and Cons

Financial Pros	Financial Cons
No state income tax	6th highest property taxes in US
Below-average COL (especially SA, El Paso, Houston)	Austin no longer affordable
Massive and diverse job market	Summer heat means high utility bills ($250-$400+/mo)
Strong population and job growth	Homeowner’s insurance rising (storms, hail)
No corporate income tax (business-friendly)	Flood risk (Houston especially)
Multiple major metros to choose from	Limited public transit in most cities

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

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