Coast FIRE in Texas
Texas is one of the most tax-friendly states for FIRE — with zero state income tax on wages, retirement withdrawals, and capital gains. Combined with a cost of living 8% below national average, the Lone Star State offers a compelling path to financial independence. But the trade-off is real: property taxes at a 1.60% effective rate (among the highest nationally) are among the highest nationally, and the lack of Medicaid expansion creates healthcare planning gaps.
FIRE Number
$1,104,000
25x annual spend
COL Index
92
8% below national average
Top Tax Rate
0%
State income tax
Medicaid
Not Expanded
Limited eligibility
ACA Premium
$480/mo
Benchmark (pre-subsidy)
Coast FIRE Strategy for Texas
Your Texas-adjusted FIRE number is approximately $1,104,000 (25x annual spending of $44,160). That's $96,000 less than the national average FIRE number, giving Texans a meaningful head start on financial independence.
Zero state income tax means your 401(k) withdrawals, Roth conversions, pension income, and capital gains are all state-tax-free. This makes Texas one of the best states for the drawdown phase of FIRE. A $60,000 annual withdrawal that might cost $5,000-8,000 in state taxes in California or New York costs $0 in Texas.
The catch is property taxes. At a 1.60% effective rate (among the highest nationally), a $300,000 home costs roughly $4,800/year in property taxes alone. Some FIRE practitioners in Texas choose to rent to avoid this, especially in the early drawdown phase when flexibility matters.
Texas has not expanded Medicaid, creating a coverage gap for adults with very low incomes. If you're planning to Coast FIRE with minimal taxable income, you may fall between Medicaid eligibility and ACA subsidy thresholds. Keep your income above 100% FPL ($15,060 for an individual) to qualify for marketplace subsidies.
Austin, Dallas, Houston, and San Antonio each offer distinct advantages. Austin's tech scene is ideal for Barista FIRE software work. Houston's low housing costs and medical hub provide affordable living with world-class healthcare. Dallas offers corporate jobs and no zoning restrictions keeping housing accessible.
Texas homestead exemptions can reduce your property tax burden. The state offers a $100,000 exemption off your assessed value for school district taxes, and over-65 homeowners get an additional freeze on school tax rates. Plan your homestead filing as part of your FIRE strategy.
Cost of Living: Texas vs. National Average
| Category | National Avg | TX | Difference |
|---|---|---|---|
| Housing | 100 | 82 | -18% |
| Food | 100 | 93 | -7% |
| Transportation | 100 | 95 | -5% |
| Healthcare | 100 | 95 | -5% |
| Utilities | 100 | 101 | +1% |
| Overall | 100 | 92 | -8% |
Index: 100 = national average. Source: Bureau of Economic Analysis Regional Price Parities.
Texas Tax Breakdown for FIRE
Income Tax
0%No state income tax
Sales Tax
6.25%6.25% state + up to 2% local (avg ~8.20%)
Property Tax
1.60%1.60% effective rate (among the highest nationally)
Capital Gains
0%No state tax on capital gains
Estate/Inheritance: No state estate or inheritance tax
Healthcare & Insurance in Texas
Medicaid Status
Income limit: Very limited — adults without dependents generally ineligible
ACA Marketplace
$480/mo
Benchmark premium (40-year-old, pre-subsidy)
No Medicaid expansion. ACA marketplace available but coverage gaps exist for low-income adults between Medicaid and subsidy eligibility.
Healthcare costs vary by age, family size, and county. Premiums listed are benchmarks — actual costs depend on your income (MAGI), plan selection, and subsidy eligibility. See our early retirement health insurance guide for detailed strategies.
FIRE in Texas: Pros & Cons
Advantages
No state income tax
Zero tax on wages, retirement withdrawals, Social Security, pensions, and investment income at the state level.
No capital gains tax
Portfolio drawdowns and Roth conversions happen tax-free at the state level — huge advantage for FIRE withdrawals.
Low cost of living
Housing costs 18% below national average, with major metros still offering affordable suburbs.
Strong job market
Diverse economy with tech (Austin), energy (Houston), finance (Dallas) hubs for Barista FIRE employment.
Disadvantages
High property taxes
1.60% effective rate means a $300K home costs ~$4,800/year — this offsets income tax savings for homeowners.
No Medicaid expansion
Coverage gap for low-income adults. FIRE practitioners managing income near the poverty line may face insurance challenges.
High sales tax
Combined rates averaging 8.20% create a regressive tax burden on consumption.
Climate costs
Extreme heat, hurricane risk, and rising homeowners insurance premiums (especially coastal) add hidden costs.
Best For
FIRE practitioners who want to maximize take-home pay during accumulation and minimize taxes on withdrawals, especially those comfortable renting or who can manage property tax costs.
Frequently Asked Questions
How much do I need for Coast FIRE in Texas?
Based on Texas's cost-of-living-adjusted annual spend of $44,160, your FIRE number at 25x spending is approximately $1,104,000. Your Coast FIRE number depends on your current age and expected returns. Use the calculator above with the pre-filled Texas spending amount to find your target.
Does Texas have any income tax on retirement withdrawals?
No. Texas has no state income tax at all. This means 401(k) withdrawals, traditional IRA distributions, pension income, Social Security benefits, and capital gains are all completely free of state income tax. This is a significant advantage for FIRE practitioners in the drawdown phase.
Is Texas good for FIRE if I plan to rent?
Texas is excellent for FIRE renters. Without the high property tax burden (which averages 1.60% effective rate), renters get the full benefit of no income tax plus low cost of living. Many FIRE practitioners in Texas strategically rent to maintain flexibility and avoid property tax exposure.
What about healthcare for early retirees in Texas?
Texas has not expanded Medicaid, so very-low-income adults may face a coverage gap. For Coast FIRE practitioners, the key is keeping your modified adjusted gross income (MAGI) above 100% of the federal poverty level ($15,060 for an individual in 2024) to qualify for ACA marketplace subsidies. Strategic Roth conversions or part-time income can help you stay in the subsidy-eligible range.
Calculate Your Texas Coast FIRE Number
Use our free calculator above — pre-filled with Texas cost of living data — to find when you can stop saving and let compound interest carry you to retirement.
Use Calculator NowSources
- [1]Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable(1998)
- [2]Determining Withdrawal Rates Using Historical Data(1994)
- [3]Tax Foundation State Tax Data
- [4]Bureau of Economic Analysis Regional Price Parities
- [5]KFF Health Insurance Marketplace Calculator
- [6]Healthcare.gov Marketplace