Chicago vs. Dallas Cost of Living: The Real Numbers

A Chicago family asked me last month to run the numbers before they'd even seen a listing. Once we got past the income tax line, the rest of the conversation took about four minutes.

Here's the number that moves first. Illinois charges a flat 4.95% state income tax on every dollar you earn, no brackets, no exceptions. Texas charges zero. On a $150,000 salary, that's roughly $7,178 a year staying in your account instead of going to Springfield. At $250,000, the gap widens past $12,000. That number alone changes the math for most Chicago transplants before they've looked at a single listing.

Property tax tells a similar story, and it surprises people because Texas has a reputation for high property taxes. It's a fair reputation, Texas runs around 1.6% to 1.8% on average, among the higher rates in the country. But Illinois runs higher still, averaging 2.07% to 2.23%, the second-highest effective rate in the nation behind New Jersey. On a $400,000 home, that gap runs close to $1,880 a year in Texas's favor, on top of the income tax savings.

Home prices get harder to compare headline to headline, because Chicago's citywide median gets pulled down by a huge stock of condos and two-flats, while Dallas's median reflects a different mix of housing entirely. The more honest comparison is neighborhood to neighborhood, and space to space. A single-family home in Lincoln Park or Lakeview, walkable, updated, with a small yard, runs well past what a comparable home costs in Lakewood or the M Streets here. The exact numbers depend on the block, but the pattern holds. Dallas buyers get more square footage and more land for close to the same monthly payment almost every time.

The job market backs up the move too. Finance, tech, healthcare, and a growing list of corporate headquarters have planted roots across DFW over the last decade, and Chicago has sent a steady stream of transplants chasing those jobs south.

Run the numbers on an actual family and the picture gets clearer. A household earning $200,000 combined saves close to $10,000 a year in Illinois income tax alone by moving to Texas. Add in the property tax gap on a typical $500,000 home, a few thousand dollars more, and total savings before you've even touched a housing decision sit well past $12,000 a year.

Insurance and everyday costs shift too, and not always in Texas's favor. Homeowners insurance runs higher here thanks to hail and wind risk, a real line item Illinois homeowners don't always budget for going in. Auto insurance, groceries, and utilities tend to land close to comparable between the two cities, occasionally a little cheaper here, so they don't meaningfully move the needle in either direction. The tax lines are still what carry the decision.

None of this means Dallas wins on every line. Chicago has the lake, the architecture, the transit system, and a walkability that most of Dallas can't match outside a handful of neighborhoods. What Dallas offers instead is more house, a lower total tax bill, and a job market that's still expanding. Which one wins depends on what you're optimizing for.

Run your own numbers before you decide. The income tax line is the same for everyone. Everything else depends on the neighborhood, and I'd rather walk you through the real math on a specific street than let you guess from a national average.

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