Many retirees already live in the Midwest area of the United States and Illinois is a great place for individuals looking to retire. Not necessarily known for great weather year round, Illinois offers many attractions and has a great history behind it. Not to mention, it is a great place to save some money from the tax man every year if you are retired. For one, the sales tax in this state is a low 6.25 percent, making this a very favorable state to reside. In addition, retired individuals can expect to see Social Security, capital gains, and certain retirement accounts to be exempt from taxes every year, which adds up to a significant dollar amount.