Cost of Living in Texas vs. California: What’s the Difference?

Cost of Living in Texas vs. California: an Overview

Texas and California are two of the largest states in the union, both in terms of population and geography. The cost of living can vary significantly between individual counties or cities within either state. That said, the average Californian faces higher costs of living than the average Texan.

When economists or statisticians are measuring the cost of living for a given country or region, they are measuring the amount that consumers need to spend in order to reach a certain average standard lifestyle. Put another way, the cost of living measures how much food, shelter, clothing, health care, education, and fuel can be bought with one unit of currency.

The Massachusetts Institute of Technology tracks living wage calculations for cities and states across the United States, defining a living wage as the “approximate income needed to meet a family’s basic needs.” MIT further defines basic needs as “food, childcare, health care, housing, transportation, and other necessities.” According to its 2024 figures, an individual has to have 30.6% more income to earn a living wage in California than in Texas.

Key Takeaways

• California is one of the most expensive states to live in, especially when it comes to housing.
• Texas is more affordable, almost across the board.
• The cost of living does not necessarily capture the quality of life.

Cost of Living in California

MIT compares the costs of eight different typical expenses for each state: food, child care, medical, housing, transportation, civic engagement, internet & mobile, and “other.”

In all areas except medical, California was more expensive than Texas. The average single adult could expect to eat with $4,508 a year in California versus $3,812 in Texas.

MIT sets the living wage for an adult with one child in California as $99,763 before taxes compared to $73,609 in Texas. On average, Texas has more expensive medical care than California.

Housing is the largest single expense category in MIT’s calculation; it is also the area where Texans saw the largest advantage. Housing costs are an impressive 58% higher in the Golden State than in the Lone Star State. The difference was more pronounced for bigger families.

Important

Texas wins out on transportation costs; Californians spend 4.4% more on getting around than their Texan counterparts.

Expenses such as entertainment, dining out, pet care, toys, hobbies, audio and visual equipment, reading, and education comprise the “civic engagement” category, which is another win for Texas. The average resident spends 40% less than those of California.

Cost of Living in Texas

Cost-of-living averages do not address the quality of the goods or services available. It could very well be that shoes cost 25% more in one state than in another, yet they last 50% longer. Perhaps food prices are the same between two states, but on average the food in one state tastes better and is healthier to consume. Nevertheless, the data do suggest that it is relatively less expensive to live in Texas than in California.

In fact, the Lone Star State is home to three of the most affordable burgs in America: Edinburg, Harlingen, and Amarillo all rank in the top five of Kiplinger’s “Cheapest U.S. Cities To Live: U.S. Cities Edition” 2024 survey. Another Texas town, McAllen, made the 25-city list too. In fact, Texas is the best-represented state in the survey.

Number two on the list, Edinburg, with its population of 104,302 had a median household income of $50,964 and a median home value of $176,800, according to the list. Harlingen, which ranked number three, is a smaller town but very similar, wealth-wise (population 71,699; median household income $50,166; median home value $123,400).

Harlingen and McAllen are located in southern Texas, where not only living is affordable, but the food is as well. A 2019 study done by Rent revealed that of 257 cities that were analyzed by affordability and pricing, only four had cheaper goods than the stores in Harlingen.

Both towns are also close to Mexico and, while located in a hot, dry state, both are within an hour’s drive of the beach. McAllen hosts a 15-acre birding habitat, too.

What’s the Average Income in Texas?

The median household income in Texas is $75,780, according to data from the U.S. Census Bureau. The average family size is 3.26, meaning that household income may include multiple earners.

What’s the Average Income in California?

The average household income in California was $91,905 between 2018 and 2022, according to data from the U.S. Census Bureau. Note that the figure is per household, meaning that some households may include several wage earners.

Why Is California So Expensive?

While there are many reasons for California’s high prices, a major culprit is the shortage of housing stock, particularly in high-demand cities like San Francisco and Los Angeles. The shortage of affordable housing causes workers to demand higher prices, which in turn raises the costs of goods and services.

The Bottom Line

California and Texas are among the largest states in the U.S., both economically and in terms of population. However, their economies are substantially different: California has higher costs, particularly for housing. People in Texas tend to earn a lower average income, but their expenses are also lower.