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 |
Related: Cost of Living by State | States with No Income Tax | Property Tax by State | Average Rent by State
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