What Is The Cost Of Living In Maryland Vs. Texas?

Cost of living is a factor that is often used to determine how expensive one location is versus another. As such, it is commonly used by people who are trying to decide where they want to live. If you’re considering Texas, you’re not alone as roughly half of the fastest growing cities in the U.S. are located in Texas. The state is highly desired for its excellent job opportunities, cultural diversity, central location, both urban and rural living, and amazing food.

Maryland, however, offers a number of the same, with the added benefit of numerous outdoor activities to enjoy, a rich history, and proximity to several major, significant U.S. cities. But, how do these two states stack up in terms of cost of living?

The cost of living index in Maryland is 113 meaning it is about 13% more expensive to live in Maryland than the national average (100). Texas, on the other hand, has a cost of living index of 93.9, so it is less expensive than both Maryland and the national average. The median price of a home in Maryland is $361,900, which is about 24% more than the national average of $291,700. Meanwhile, the median home price in Texas is $243,600 – under the national average and about 33% cheaper than Maryland.

Aside from median housing prices, let’s take a deeper look at how the cost of living compares in Maryland vs. Texas

When you evaluate the fact that the median home price in Maryland is $361,900, it is more expensive to purchase a home here than in Texas. In fact, with Texas’ median home price of $243,600, you’d end up spending almost 50% more for a home in Maryland.

In Baltimore, Frederick, and most areas across Maryland, the home prices are continuing to rise. The price of homes sold are up around 9.4% from the previous year. This is making it difficult for individuals to find their ideal home in the state. As home prices soar at an astonishing rate, it’s making it increasingly challenging for potential buyers to even afford to become homeowners.

For those who can currently afford to buy a home, the Maryland housing market is slowly becoming less competitive. This means that buyers may have more options as the supply and demand issue balances itself out. Fortunately, with mortgage rates as low as they’ve ever been, those who lose out in a bidding war don’t have to worry that they’ve missed their opportunity to buy.

Like Maryland, in the last few years, homes put up for sale in Texas have received multiple offers and many are selling for way above the asking price. While it may be a great time to be a seller in both Maryland and Texas, the competition and higher prices are not ideal for buyers. Regardless, even with the increased prices, homes still remain cheaper in Texas than Maryland.

While, overall, cheaper housing costs are an advantage to living in Texas over Maryland, prices vary quite a bit in both states. For example, the median home prices in Annapolis and Silver Spring, Maryland are nearly $500,000 and Austin, Texas’ median home price is over $550,000. Whereas, if you choose to live in cities like Baltimore, Dallas, and Houston, the median home prices are below the national average.

Although there are cities in Texas that have higher median home prices than other states in the U.S., Texas housing costs are still between 30 and 35 percent cheaper than Maryland.

While between 2019 and 2020 the rent decreased in Maryland and 11 other states in the U.S., the state is still known for being an expensive place to live for renters. With a statewide average rent of $1,392 per month, Maryland has the third highest average rental prices in the nation – following closely behind California and Hawaii.

States with high rent prices also tend to have some of the highest overall costs of living in the U.S., as well as higher-than-average median household incomes. This is certainly the case for Maryland. With that said, refer to the following table for the average monthly rent in some of the various cities across the state of Maryland.

Texas was also one of the 12 states that saw a decrease in average rental rents between 2019 and 2020. Though, rates in Texas cities generally sit below the national average, with the average statewide monthly rental price being $1,045. Like Maryland, rental prices vary based on where you live in Texas. For example, rent in Flower Mound, Texas is the most expensive in the state at $1,685, while Brownsville has the cheapest rent at just $730 per month.

The table below displays a more comprehensive look at the average rent in some of the major cities across Texas:

Maryland, like the federal income tax system, has a progressive state income tax. This means that you pay based on your income, with higher rates for higher earners and lower rates for lower earners. For the state income tax there are eight income tax brackets in total, ranging from 2% to as much as 5.57%. However, Maryland has both state and county income taxes. So, in addition to state income taxes, Maryland taxpayers also pay taxes based on the county they live in. Instead of using income brackets, the county income taxes are a flat rate.

Texas residents, on the other hand, enjoy the benefit of no personal state income tax. The state is one of the few that does not have a state income tax whatsoever. So, whether you’re a physician, real estate agent, lawyer, or dog-walker, you are not required to pay income tax on your earnings in the state of Texas. You do, however, still have to file a federal income tax return and pay your federal income taxes.

Maryland’s sales tax rate is a flat 6%. Unlike most other states in the U.S., there are no additional local sales taxes anywhere in the state of Maryland. This means that the 6% rate applies regardless of your location within the state.

At just 6.25%, Texas’ base sales tax rate is higher than Maryland. However, when you factor in all the extra city and county taxes, the highest sales tax rate you could end up paying in Texas is 8.25%. Rates in most of Texas’ major cities, such as Dallas, San Antonio, and Houston, do charge the 8.25% rate.

There are 179 distinct tax authorities that collect property taxes in Maryland, including 155 incorporated cities, the City of Baltimore, and 23 counties. Property tax rates vary based on which district the home is located in. However, the average statewide effective rate is 1.06%, which is just slightly below the national average of 1.07%. Baltimore County has one of the highest rates in the state at 1.17%, while Talbot County’s 0.68% rate is the lowest.

The property taxes in Texas are some of the highest in the U.S. The average effective property tax rate is 1.69%, meaning Texans pay an average of $3,390 in property taxes ever year. Texas property taxes have been a longstanding issue between the state and local government. Some representatives seek to limit rates, while cities and counties contest this because, in some areas, property taxes are the main source of local income.

Whether you decide to live in Maryland or Texas, you must consider transportation costs in order to determine the overall cost of living in either state. These costs include expenses like gas prices, new vehicle purchase prices, monthly transit passes, bus fares, and additional public transportation fees. Maryland’s transportation costs are about 19% higher than the national average, likely due to the high gas prices and public transportation.

Although both states have indexes that are over the national average, with Maryland’s transportation cost index of 119.3 and Texas’ transportation cost index of 103.3, these expenses are cheaper in Texas overall.