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

While Minnesota offers an abundance of outdoor recreational activities, a strong job market, delicious food, and is, overall, a beautiful state, Texas is centrally located, culturally diverse, and has a more favorable climate. If you’re planning a relocation and cannot decide whether Minnesota or Texas is better for you, cost of living is an important consideration to make.

Oftentimes, it is the main factor that people use to determine whether they want to live in one location versus another. So, how do Minnesota and Texas compare when it comes to cost of living?

The overall cost of living index in Minnesota is 97.2, meaning it is about 3% more affordable to live in Minnesota than the national average (100). Texas, on the other hand, has a cost of living index of 93.9, so it is more affordable than both Minnesota and the national average. The median price of a home in Minnesota is $300,100, which is only about 3% higher than the national average of $291,700. Meanwhile, the median home price in Texas is $243,600 – under the national average and about 19% cheaper than Minnesota.

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

When you consider the fact that Minnesota’s median home price is about $300,000, it is more expensive to purchase a home here than in the state of Texas. In fact, with Texas’ median home price of nearly $244,000, you’ll end up spending about 23% for a house in Minnesota compared to Texas.

Currently, the housing market in Minnesota is in favor of sellers. This is forcing homebuyers across the state to rethink their strategy. As of 2021, like much of the U.S., Minnesota is experiencing a serious lack of inventory and homes prices at historic highs. Homes are selling quickly, receiving multiple offers, and some are even selling for over the original asking price. While the historically low-interest rates are still a reason to buy, buyers are having to expand their search since the market simply cannot meet the demand.

A very similar situation is taking place in Texas, with home values up about 8.5 percent since last year. Like Minnesota, this is a direct result of limited inventory. Both states have a classic case of supply and demand imbalance. Texas homes are also receiving multiple offers and most of them are selling for higher than the asking price as well.

While it may be an ideal time to be a seller in both Minnesota and Texas, competition and home prices are higher than ever before for buyers. Regardless, even with the record-high prices in both states, it is still cheaper to purchase a home in Texas than in Minnesota.

As you can see based on the table above, more affordable housing is an advantage to settling in Texas over Minnesota. Though, it’s important to note that prices can vary quite a bit based on the city you live in either state. For instance, while the Texas median home price is below the national average, places like Austin, Texas are considerably above. When it comes to Minnesota, the opposite is the case. Most cities have median home prices slightly above the national average, but locations like St. Paul, Minnesota are below.

While there may be some cities in Texas that are more expensive than other states in the U.S., housing costs are still between 20 and 25 percent cheaper than in Minnesota.

Between 2019 and 2020, average rent decreased in 12 U.S. states, and Minnesota was among them. The state is also one of the select few with an average monthly rental price below $1,000 per month. Though, with a statewide average monthly rent of $977, Minnesota is the 24th most expensive state for renters.

Average rent in Minnesota is generally lower than the national average, but varies based on where you live. For example, apartments in Golden Valley are the most expensive in the state, at $1,734. Whereas, St. Cloud has the cheapest rental prices, renting for just $911 per month.

With that said, the following table outlines the average monthly rent for some of the various cities throughout the state of Minnesota.

Texas was also among the 12 states that saw a drop in average rental prices during between 2019 and 2020. With an average monthly rental price of $1,045, rents in Texas trend below the national average as well. However, they are more expensive than Minnesota overall, earning the 18th spot on the list of most expensive rents in the U.S.

Like Minnesota, the actual rent you’ll pay depends on where you live in Texas. For instance, Flower Mound, Texas has the most expensive rental prices in the state at $1,685. Meanwhile, the city of Brownsville is the cheapest place for renters in Texas, at just $730 per month.

The table below displays a more detailed look at the average rent you can expect in some of Texas’ major cities:

State income taxes in Minnesota are among the highest in the country. The state has a progressive income tax, meaning you pay based on how much you make. There are four income tax brackets in total, with higher marginal rates for higher-income earners. Minnesota’s state income tax rates range from as low as 5.35% to as much as 9.85% for those who earn over $164,400 in taxable income.

Texas, on the other hand, is one of the few states in the nation that does have a state income tax of any kind. This means that whether you’re a teacher, real estate mogul, doctor, lawyer, or dog-walker, you do not have to pay a state income tax on your annual earnings in Texas. Of course, you are still required to file a federal income tax return and pay your federal income taxes every year – but nothing at the state level.

On a nationwide scale, sales taxes in Minnesota are above average. The state’s base sales tax rate is 6.875%. Though, many cities and counties levy their own local sales tax, with rates of up to 2.00%. This means that the highest sales tax that you could be expected to pay in Minnesota is 8.875%.

Texas, however, has a lower base sales tax rate – at 6.25%. When you factor in the additional city and county taxes, the highest sales tax rate you could pay in Texas is 8.25%. However, this is the rate in most of Texas’ major cities – including Houston, Dallas, and San Antonio.

Like sales tax, property taxes in Minnesota are also above average. Since Minnesota property taxes are mainly administered and collected at the county level, rates vary based on where you live. They range from as low as 0.56% in Aitkin County, to as much as 1.27% in Hennepin County. The average effective property tax rate is 1.08%, meaning annual property tax payments in Minnesota are about $2,670 on average.

Texas property taxes are also above average and some of the highest in the nation. The state’s average effective property tax rate is a staggering 1.69%, meaning those who own property in Texas pay 1.69% percent of their home’s assessed value in taxes annually. This translates to an average of $3,390 in property tax payments for Texas homeowners.