Zakat is payable on your total assets that you have had in your possession for a lunar year. Zakat is liable on gold, silver, cash, savings, investments, rent income, business merchandise and profits, shares, securities and bonds. Zakat is not liable on your personal living expenses, e.g. primary home, car, clothing, food, etc. Zakat is not paid on wealth used for debt repayment either.
To pay zakat, your wealth must be greater than the nisab threshold.
The nisab amount is the value of 85 grams, or approximately 3 ounces of gold.
In Arabic, zakat means purification, growth and blessing. It is a charitable practice that requires all able Muslims (those who meet the requirement of zakat as dependent upon nisab and hawl) to contribute a fixed portion of their wealth – 2.5% of savings — to help the needy. Some may compare zakat to tithing. It is important to note that the zakat is calculated based on savings, not income alone.
Nisab is the minimum amount of wealth a Muslim must have—after calculating necessary expenses—to be eligible to contribute zakat. Nisab is equivalent to the current value of 3 ounces of gold (or 87.48 grams). This number may change daily depending on fluctuations in the gold exchange rate.
Hawl is defined as the completion period for a zakat asset, which is one lunar year. As long as your wealth has not decreased to zero at any point of the year, zakāt must be calculated on the full amount that is possessed at the date of the hawl, for e.g. if the money you have in your bank account fluctuates throughout the year but is $4000 at the time you wish to pay zakat, that is the dollar amount you input to the zakat calculator for the row “Current balance held in bank accounts.” Fluctuations in your account during the course of the year are to be disregarded.
There are some forms of zakat that do not require hawl, such as for crops, when zakat should be paid at the time of the harvest. For clarification, it is recommended that you consult with your local imam or scholar.
Every adult Muslim who meets the requirements of nisab and hawl in a lunar calendar year must pay zakat for that year. There are some conditions that may require others, a wali (guardian) of a minor for instance, to pay zakat too. As always, it is best to consult with your local imam or scholar for clarification.
Yes. In Islam, intention is an essential part of any act of worship, including the payment of zakat. The intention must be made at the time the zakat is paid.
In the language of the Holy Qur’an, zakat and sadaqah are the same. In practice, however, sadaqah is the term used to indicate voluntary charitable giving while zakat is obligatory.
Zakat al-Mal (commonly called “zakat“) is due when a person’s wealth reaches the nisab amount and can be paid anytime during the year. Zakat al-Fitr is paid by the head of the household for each member of the family, before Eid al-Fitr prayer. Zakat al-Fitr is about the price of one meal—estimated at $12 in 2019.
Fidyah is a religious donation of money or food made to help those in need. Fidyah is made when someone is ill or of extreme age (old or young), cannot fast for the required number of days, and will not be able to make up for the fast. In Ramadan, Fidyah must be paid for each fast missed. If, however, one misses their fast due to being sick or on a journey, but will be healthy enough to make up for it, they should preferably make up for the fast at a later date, as prescribed in the Qur’an.
Kaffara is a religious donation of money or food made to help those in need. Kaffara is made when someone deliberately misses a fast or breaks their fast purposefully, such as by having intercourse, eating, or deliberately breaking an oath.
For a detailed list of wealth to include, please use the zakat calculator above. Please consider the following conditions:
While there are some slight differences in scholarly opinions, yes, you must pay zakat on gold and silver jewelry you do not wear and that you own for investment purposes. In the Hanafi madhab, it is mandatory to pay zakat on all gold and silver jewelry, regardless if you use it or not or regardless if it is mixed with other stones (e.g., diamonds, pearls), as long as it reaches the nisab amount.
One does not have to pay zakat on a primary place of residence. If the house qualifies as a secondary residence that sometimes get rented out, however, zakat is due on it after subtracting necessary expenses from the income generated.
Yes. For example, if you have a mortgage of 30 years, you will subtract your annual dues from your total assets. (Your annual dues is the sum of the payments due on you for the entire year.)
The strongest view is that the money received from the rent will be added to the individual’s wealth. If a person has wealth in excess of the nisab and he possesses it for an entire lunar year, he must then pay zakat on that wealth. If, for example, he uses that money to support himself and the money does not stay with him for a lunar year’s duration, there is no zakat on that wealth.
Yes, zakat is mandated on the current withdrawable amount after deducting all taxes, interest, administrative fees, penalty, etc. This does not mean you must withdraw the amount to pay zakat on it, it means you should do a theoretical calculation to come up with these numbers, so as to be able to calculate your zakat.
For dividend based stocks, you own a percentage in those companies you have shares/ stocks in. This means that you will only pay zakat on the “zakatable” assets of those companies. That is their (trade good + cash surplus) in most cases. As machinery, land, fixtures and fittings, furniture, buildings etc. are exempt from zakāt; one is allowed to subtract these from the total assets. This could be obtained from the company’s annual report. For example if one has shares worth $10,000 and the machinery, land, etc., are worth 5% of the total assets of the company, then deduct $500 for machinery, land, fixtures and fittings, furniture and buildings (the zakāt-exempted items) thereafter deduct the liabilities of the company proportionately to the percentage of shares held, and the zakāt must be calculated on the balance. In some cases, you will end up paying zakat on 25-30% of the value of your stocks, not 100%.
Zakāt must be paid on a loan lent to others when the loan is received back. Zakat of all previous years during which this money was lent out, must be calculated and paid. It is recommended that zakāt on this loan be paid every year as long as it is acknowledged, so it does not become difficult to pay all the previous years’ zakāt at once when received. For e.g., if you loaned $10,000 to Muhammed to be paid back within 3 years, it may be easier for you to pay zakat on the $10,000 each year. Muhammed does not need to pay zakat on the $10,000 loan.
According to the Holy Qur’an (9:60), there are eight categories of people who qualify to be beneficiaries of zakat:
Most scholars agree that the poor and needy are the most dire categories of people to receive zakat. Given that, it is acceptable to give your entire zakat allotment to individuals who are in any of those groups.
Zakat should be paid as soon as possible prior to or at the time that you’ve earned the requisite amount of nisab each lunar year, or one year after you last paid it. You may pay zakat at any time of the year. Many Muslims like to pay their zakat in Ramadan each year.
Each person can decide where and when to give the money within the year, as long as it is given to any of the eight categories of people that is due the zakat fund. A person may choose to give the entire lump sum to one cause or split it up between multiple causes. You may choose to give it all at one time or distribute it throughout the year. Many Muslims give their zakat to multiple causes. However, many choose to give all of their zakat in the month of Ramadan.
You may make your zakat contributions toward any of our funds or projects. It is your intention that counts in this case. If you have communicated to us that you are donating with zakat funds, we follow specific zakat guidelines for distribution.
Zakat al-Fitr should be paid on behalf of each person in the family, e.g. if your family consists of two parents, three children and one grandparent, then you would owe six Zakat Al-Fitr payments. There are some scholars that recommend that Zakat al-Fitr is also paid on behalf of unborn children after the 120th day of pregnancy, but do not view it as obligatory. Most scholars do agree, however, that Zakat al-Fitr should be paid on behalf of the baby after his/her birth. Please do consult with your local imam or scholar for further clarification.
It should be paid before Eid prayer (or any day during Ramadan). There are some schools of thought that also allow for Zakat al-Fitr to be paid even before Ramadan. Consult with your local imam or scholar if you need additional information.
Yes, you can choose sadaqah as an option in any of our appeals. Your sadaqah donation can give families much-needed food, emergency relief, job opportunities, and much more.
0%. We do not use zakat donations for administration costs, excluding credit card processing fees. Muslims for Humanity makes it a priority to use the smallest donation amount possible for fundraising and marketing costs while still providing high-quality relief micro-payments and relief services to families in need. We do not use zakat donations for operational costs, excluding credit card processing fees. We choose to pay for operational costs via sadaqah funds/general donations and grants. Our organization is professionally run by a core team of dedicated volunteer staff. While it is common for Islamic relief organizations to use 4-11% of donations towards admin costs and fundraising costs, Muslims for Humanity chooses to lower this percentage to 2% or less.