Economy of Texas

The economy of the State of Texas is the second largest by GDP in the United States after that of California. It has a gross state product of $2.769 trillion as of 2024, making it very important for the whole country. In 2024, Texas had more big companies listed in the Fortune 500 than any other state, with 53 in total.

Texas also sends a lot of goods to other countries. In 2023, it made more than $440 billion from selling things overseas. If Texas were its own country, it would be the 8th largest economy in the world, bigger than Canada, South Korea, Russia, and Australia.

In 2024, the average household in Texas earned about $79,721 a year. Even with many people living there—Texas has the second largest population in the country after California—the state had some money borrowed, about $73 billion, to help build and support different projects.

History

Before World War II, four main businesses helped shape Texas's economy: cattle and bison, cotton, timber, and oil. Cattle and bison were the first to become very successful. At first, people mainly took furs and hides from cattle, because beef wasn’t very popular in the United States. But Texas business people helped make beef popular, and it became more and more in demand. The cattle business made the most money in the late 1870s and 1880s.

Cotton had been grown in Texas since Spanish times and became very important. By the early 1900s, Texas was the top cotton producer in the country. But by the 1920s, the cotton industry began to decline because of government rules and competition from other countries.

Forests

Main article: History of Texas forests

The forests of Texas have always been important. When Europeans first arrived, the state's woodlands were full of wildlife and gave early settlers many chances to make money. Forests still matter a lot today for both the economy and the environment.

The thickest forests are in eastern Texas. The Big Thicket area, near Houston and Beaumont, had the most trees. It wasn’t settled much until the mid-1800s. The Rio Grande valley in South Texas once had many palm trees, but today there are very few left.

When railroads were built in eastern Texas in the mid-1800s, the timber industry grew quickly in the 1880s. This successful time lasted about 50 years, but it ended when many forests were cut down and prices dropped during the Great Depression.

Oil boom

Main article: Texas oil boom

In 1901, a company found a huge amount of oil on Spindletop Hill near Beaumont. This was the biggest oil discovery the world had ever seen. It led to people searching for oil all over Texas and nearby states. By 1940, Texas was the top oil producer in the United States.

Texas stayed mostly rural until World War II, but the oil industry grew fast and brought many new industries. The war created a big need for oil and other products that Texas could make. By the end of the war, Texas had become a leading industrial state, and most people lived in cities. The economy had grown to include many different businesses, even though oil was still the biggest part.

The economy of Texas relies largely on information technology, oil and natural gas, aerospace, defense, biomedical research, fuel processing, electric power, agriculture, and manufacturing.

Exports

Texas has been the top state in the United States for exports since 2001. In 2023, it earned over $440 billion.

Texas mainly exports oil and gas, petroleum products, chemicals, computer parts, and transportation equipment. Mexico is its biggest customer, buying nearly $130 billion worth of goods in 2023. Canada and the Netherlands are also big customers.

Dallas/Fort Worth International Airport is known as the best place for air cargo in the world. The Port of Houston is the biggest port in the U.S., handling more than 266 million tons of cargo in 2021.

Taxes

Texans pay less in state and local taxes than most Americans. The state does not have a personal income tax. This means people only pay income tax set by the federal government. Instead, Texas uses a sales tax of 6.25%, with some cities adding up to 2% more.

The state also has property taxes collected by local governments. These can be higher than in many other places, but the cost of homes is usually lower. Property taxes help pay for things like schools and local services.

Industries

Agriculture

Main article: Agriculture in Texas

Texas has the most farms in the United States. It leads the country in cattle and cotton. Agriculture is very important to Texas.

Texas grows many different crops. It is a big producer of sheep and goat products, and it is famous for its cotton. The state is also a leader in growing cereal crops. The Rio Grande Valley is great for growing grapefruit. Texas is also a big producer of spinach, okra, onions, and watermelons.

Aeronautics

The Lyndon B. Johnson Space Center in Houston is a major hub for space and airline work. It is part of the National Aeronautics and Space Administration (NASA).

Dallas/Fort Worth International Airport is the biggest airport in Texas. It connects to many places in the U.S. and around the world. It is the main airport for American Airlines.

Houston’s George Bush Intercontinental Airport is the second biggest airport in Texas and the main airport for United Airlines.

American Airlines is the world’s largest airline. Southwest Airlines is another big airline. Lockheed Martin Aeronautics is also in Texas.

Defense

Texas is home to some of the largest military bases in the United States. The state also has many Air Force bases and Navy bases.

Many defense contractors have offices in Texas, especially in the Dallas and Houston areas.

Computer technology

Texas is a key place for computer technology. Austin, Dallas, and Houston are important centers for this industry. Austin is called “Silicon Hills” because of its many computer chip companies. Dallas is where the integrated circuit was first made.

The North Dallas area has many technology and phone companies. San Antonio is home to Rackspace, a big company in cloud computing.

Energy

Main article: Energy in Texas

Energy is very important to Texas, especially oil. Texas is the top producer of energy in the U.S. Texas is also the leader in wind power.

Tourism

Texas attracts many visitors. Tourists can explore the Hispanic culture in San Antonio and El Paso, enjoy western attractions in Fort Worth, or visit resort areas like Galveston, Corpus Christi, and Padre Island on the Gulf of Mexico. Houston and Dallas are also big spots for conventions and sports.

Entertainment

Texas is a popular place for making movies and TV shows. Austin is one of the top places for filming in the country. The famous TV show Dallas was filmed at Southfork Ranch.

The Texas Film Commission helps filmmakers with services like finding locations. Many Hollywood studios are moving some of their work to Austin, Houston, and Dallas. San Antonio is home to iHeartMedia, a big media company. The Dallas-Fort Worth area has several video game developers, and Austin has others like Retro Studios and Armature Studio.

Healthcare

Main article: Healthcare in Texas

Healthcare is growing fast in Texas. The Texas Medical Center in Houston is the world’s largest medical center. It includes the University of Texas Health Science Center at Houston and The University of Texas M.D. Anderson Cancer Center. The center also has Baylor College of Medicine.

The University of Texas has medical branches in several cities. The South Texas Medical Center in San Antonio brings in money to the state’s economy. Texas also has several other medical research centers.

Wealthiest places in Texas

Main article: Texas locations by per capita income

Here are 32 places in Texas with the highest average incomes. The list starts with Round Top, which has the highest average income, and ends with Sunset Valley, which has the lowest average income on this list.