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

Despite being located several states away from each other, Texas and Florida are relatively similar. They both offer a warm climate, have a coastline that borders the Gulf of Mexico, and residents do not have to pay a state income tax. Though, each state also has its own unique offerings as well. For example, Texans enjoy a central location, more cultural diversity, and less traffic.

Whereas, Florida has more tourist attractions, more employment opportunities, better transportation, and higher rankings in education. With that said, how do these two states stack up when it comes to cost of living?

The cost of living index in Texas is 93.9, meaning it is about 6% more affordable to live in Texas than the national average (100). Florida, on the other hand, has a cost of living index of 102.8, so it is more expensive than both Texas and the national average. The median price of a home in Texas is $243,600, which is about 16.5% less than the national average of 291,700. Meanwhile, the median home price in Florida is $294,900 – relatively on par with the national average but 21% higher than Texas.

Aside from median housing prices, let’s explore how the cost of living compares in Texas vs. Florida.

When you evaluate the fact that the median home price in Texas is close to $244,000, it is much more affordable to purchase a home here than in the state of Florida. With Florida’s median home price of nearly 295,000, you’d be looking at spending about 20% more on a home in Florida compared to Texas.

Throughout much of 2020, there was a massive migration of people to Florida because people realized that they could still make the same amount of money here but have a much higher quality of life. Though, with such an influx of people and mortgage rates at an all-time low, this resulted in limited inventory, a high demand, and rising home prices. Though home prices are higher than anyone ever expected, it’s predicted that the ratio of buyers to sellers may ease slightly.

The same situation is occurring across most of the U.S. as a result of the pandemic. Over the past year, Texas home values have increased by 8.5 percent. The major contributing factor to this is limited inventory, as there are fewer homes for sale in Texas now than at any point during the last two decades. In both Texas and Florida, it’s a classic case of supply and demand imbalance. Homes on the market are receiving several offers, with many of them selling for higher than the asking price.

Well it may be a great time to be a seller in Texas and Florida, both markets are competitive for buyers and home prices are more expensive than ideal. Regardless, it remains cheaper to purchase a home in Texas and Florida.

Overall, more affordable housing is considered a significant advantage of settling in Texas over Florida. Of course, homes are more expensive in Austin, but if you choose to live in cities like Dallas, Fort Worth, and Houston, median home prices are lower than the national average. Whereas, you’ll find that a large majority of Florida cities have median home prices that are above the national average.

While there may be some cities in Texas that have higher home prices than other states in the U.S., they are still between 20 and 25 percent cheaper than Florida.

Between the years of 2019 and 2020, the average rent in the U.S. dropped in 12 states, with Texas being one of them. With an average statewide rental price of $1,045, rent in Texas cities is generally below the national average. Though, rental prices can vary quite a bit based on where you live in the state. For example, rentals in Flower Mound, Texas are the most expensive in the state at $1,685, while the city of Brownsville has the cheapest rates at just $730 per month.

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

Like Texas, rental prices in Florida differ based on the city you live in. With a statewide average rent of $1,175 per month, Florida is the eleventh most expensive state for renters. However, rental prices are expected to keep rising all across the state, with South Florida having the third fastest-growing rental market in the country. In this area, the average rent is currently (as of August 2021) $2,432, about a 27% increase from last year.

The following table displays a more comprehensive look at the average monthly rental prices you can expect in some of the most popular cities in Florida:

Fortunately, one of the benefits of living in either Texas or Florida is the lack of state income tax. They are both among a select few states in the nation that have no personal income tax. Whether you’re a doctor, teacher, real estate agent, or nanny, come tax season you do not have to file a state income tax return and do not have to pay any sort of state income tax in either Texas or Florida.

Of course, you’ll still need to file a federal income tax return and pay your federal income taxes – but nothing is required at the state level.

At just 6.25%, Texas’ statewide sales tax rate is relatively modest. Though, when you consider all of the additional city and county taxes across the state, the highest sales tax rate you could end up paying in Texas is 8.25%. Unfortunately, most major cities in Texas – such as Houston, Dallas, and San Antonio – do hit this sales tax limit.

Florida, on the other hand, has a lower statewide sales tax rate, at 6%. Additionally, some Florida counties collect their own sales taxes, which range from as little as 0.5% to as much as 2.5%. This means that the actual sales tax rates in Florida that you pay could be as much as 8.5%. Unlike Texas, there are no sales taxes charged at the city level in Florida.

Whether you’re thinking about purchasing a home in Texas or somewhere along Florida’s 8,436 miles of coastline, you must consider the property taxes. Unfortunately, the property taxes in Texas are some of the highest in the country, with an effective property tax rate of 1.69%. This means that Texans pay a staggering $3,390 in property taxes per year, on average. Texas property taxes have been a long-standing issue between the state and local governments. While some representatives want to limit rates, cities and counties oppose this idea, as in some areas the property taxes are the primary source of income.

Florida’s average effective property tax rate is just 0.83%, well below the national average of 1.07%. Since the property taxes in Florida are collected at the county level, they can vary based on where you live. For instance, Miami-Dade County’s effective rates are actually 0.97% of a home’s assessed value.