Is it true there is really no income tax?

Yes, Texas has no state income tax—you only pay federal income taxes. This is a major advantage for high earners, potentially saving 5-13% compared to states like California.

What is the average property tax?

The effective rate averages 1.63% of your home's assessed value annually (about $3,872 for a typical home), varying by county from 1.6% to 2.5%. It's among the highest in the U.S.

How much is electricity in the summer?

Expect $250–$400+ per month for a typical home due to high AC usage in triple-digit heat. Bills can spike 80% above spring averages, depending on your plan and home size.

No, most essentials like bread, milk, eggs, fresh produce, and unflavored water are exempt from sales tax. Prepared hot foods, candy, soda, and alcohol are taxed at the full rate (up to 8.25% combined).

Does the neighborhood affect my taxes?

Yes, significantly—top school districts fund via higher property taxes, adding 20-30% to rates in premium areas like Eanes ISD vs. average zones.

Full-time toddler care averages $1,100–$1,600/month ($9,324–$15,000/year), up to $2,000 in cities like Austin. For two kids (infant + toddler), it's about $21,600 annually.

Is there a tax on cars when moving here?

Yes, new residents pay a $90 new resident tax (in lieu of use tax) plus registration ($50.75–$74.25) and inspection fees ($7–$40.75) when titling an out-of-state vehicle within 30 days.

Why is car insurance so pricey?

High rates ($150–$229/month or $1,800–$2,751/year) stem from hail/flood risks, 14% uninsured drivers, high speed limits, and urban traffic—Texas ranks costlier than 40+ states.

Do renters pay property tax?

Indirectly, yes—landlords factor property taxes into rent, so high-tax areas (e.g., Harris County at 1.77%) drive up monthly costs by 10-20% compared to low-tax zones.

Is there an inheritance tax?

No, Texas has no state inheritance or estate tax—only federal estate tax applies if your estate exceeds $13.61 million (2025 threshold).

Texas Cost of Living 2025: Taxes, Utilities & H-1B Financial Survival Guide

Cody Johnson

Author

November 26, 2025

Is Texas truly cheap? Reveal the hidden costs: high property taxes, electric bills & the rumored $100k H-1B fee impact. The ultimate 2025 financial guide for expats.

Frequently Asked Questions

Find answers to common questions about this topic.

Sources

References and sources used in this article.

Texas Comptroller of Public Accountshttps://comptroller.texas.gov/

Power to Choose (Official Electric Choice Website)http://powertochoose.org/

Texas Department of Insurancehttps://www.tdi.texas.gov/

Texas Cost of Living 2025: Taxes, Utilities & H-1B Financial Survival Guide

Frequently Asked Questions

Sources

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Hidden Costs in Texas: Property Taxes, Tolls & The 2025 H-1B Financial Squeeze

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Frequently Asked Questions

Is it true there is really no income tax?

What is the average property tax?

How much is electricity in the summer?

Are groceries taxed?

Does the neighborhood affect my taxes?

How much is daycare?

Is there a tax on cars when moving here?

Why is car insurance so pricey?

Do renters pay property tax?

Is there an inheritance tax?

Sources

Related Articles

Hidden Costs in Texas: Property Taxes, Tolls & The 2025 H-1B Financial Squeeze

Texas Banking Guide 2025: How to Open an Account Without SSN & Prep for H-1B