Cost of Living in Waco
Waco's overall cost-of-living index runs 86 (14% below the national average), driven mainly by affordable housing -- but a real, currently elevated crime rate and a below-national median household income are part of the honest cost-benefit picture here, not just the affordability headline.
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Learn moreNo state income tax applies statewide
Texas levies no state personal income tax, a real, structural cost advantage that applies in Waco exactly as it does statewide -- offset, as everywhere in Texas, by property tax carrying more of the funding load (Waco's own effective rate runs 2.09%, well above the 1.02% national median cited by Ownwell; see taxes-insurance topic).
Housing is the largest single cost-of-living factor, and it runs affordable here
Waco's citywide median home sale price ran $275,000 as of late 2025/early 2026 (Redfin), up a modest 3.1% year over year -- well below the national median. The cost-of-living index's housing sub-score (62) is the single lowest category, meaning housing is Waco's biggest relative bargain; utilities (104) actually run slightly above the national average.
The Magnolia effect has a real, disclosed cost impact concentrated in specific neighborhoods
The tourism boom tied to Magnolia Market at the Silos has driven real, widely reported short-term-rental conversions and investor purchases concentrated in the neighborhoods closest to downtown and Baylor -- cost of living in those specific areas likely runs meaningfully above the citywide figure, even though a precise neighborhood-level premium was not confirmed in a same-session source.
Median household income runs meaningfully below the national figure
Waco's median household income is $51,468, roughly 32% below the $75,149 national median (BLS-sourced aggregation) -- a real gap partly explained by the large full-time student population, but a genuine affordability constraint for many working residents regardless of cause.
Key takeaways
- Texas's no state income tax applies fully in Waco, a real structural cost advantage offset by a heavier property-tax load (2.09% effective citywide rate).
- Overall cost-of-living index is 86 (14% below national average), driven primarily by affordable housing ($275,000 citywide median sale price).
- The Magnolia/Silo District tourism boom has driven real, documented short-term-rental and investor-purchase pressure concentrated near downtown and Baylor -- cost of living in those specific areas likely runs above the citywide average.
- Median household income ($51,468) runs about 32% below the national median -- a real affordability constraint for many residents even in a low-cost-of-living city.
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