How is Zakat Calculated

Zakat Calculator

Use this calculator to determine your Zakat obligation based on your assets and liabilities.

Zakat-Eligible Assets

Deductible Liabilities

Calculation Summary:

$' + totalZakatEligibleAssets.toFixed(2) + '

$' + totalDeductibleLiabilities.toFixed(2) + '

$' + netZakatEligibleWealth.toFixed(2) + '

$' + nisabThreshold.toFixed(2) + '

$' + zakatAmount.toFixed(2) + '

Understanding Zakat: A Pillar of Islam

Zakat, an obligatory charity in Islam, is one of the five pillars of the faith. It serves as a means of purifying one's wealth and distributing it among the needy and deserving members of society. The word "Zakat" itself means 'that which purifies' or 'growth'. It is not merely a charitable donation but a religious obligation for all eligible Muslims.

Who is Obligated to Pay Zakat?

Zakat is obligatory upon every Muslim who possesses wealth exceeding a certain threshold, known as the Nisab, for a full lunar year (Hawl). This wealth must be productive or have the potential for growth. The individual must also be sane and an adult.

What is Nisab and Hawl?

• Nisab: This is the minimum amount of wealth a Muslim must possess before they become liable to pay Zakat. The Nisab threshold is traditionally defined by the value of either 87.48 grams of pure gold or 612.36 grams of pure silver. For general wealth (cash, investments, business assets), the gold standard is often used as it typically results in a higher threshold, ensuring Zakat is paid by those with more substantial means. The value of Nisab fluctuates with the market prices of gold and silver.
• Hawl: This refers to the lunar year. For Zakat to be due, the wealth must have been in the possession of the individual for a complete lunar year, starting from the day the wealth first reached the Nisab threshold.

Assets Subject to Zakat

Zakat is typically calculated on the following types of assets, provided they meet the Nisab and Hawl conditions:

• Cash and Bank Savings: Any money held in bank accounts, cash on hand, or other liquid assets.
• Gold and Silver: This includes jewelry, coins, bars, or any other form of gold and silver.
• Investments and Shares: The current market value of stocks, bonds, mutual funds, and other investment portfolios.
• Business Inventory/Goods for Trade: The current market value of goods held for sale in a business.
• Rental Income: Accumulated net income from properties rented out.
• Other Zakat-eligible Assets: This can include outstanding loans owed to you that are likely to be repaid, or other forms of wealth not explicitly mentioned but fall under the category of productive assets.

Deductible Liabilities

Before calculating Zakat, certain liabilities can be deducted from your total assets:

• Short-term Debts: Any debts that are due within the next lunar year. This includes credit card bills, personal loans, or installments on larger loans (like mortgages or car loans) that are due in the immediate future.
• Immediate Living Expenses: Essential expenses for yourself and your dependents for the upcoming month or year, depending on scholarly interpretation. This ensures that Zakat is not paid from funds needed for basic survival.

The Zakat Calculation: 2.5%

Once you have determined your total Zakat-eligible assets and deducted your liabilities, you arrive at your net Zakat-eligible wealth. If this net wealth meets or exceeds the Nisab threshold, then Zakat is due at a rate of 2.5% of this net wealth.

The formula is:

(Total Zakat-eligible Assets - Total Deductible Liabilities) × 2.5% = Zakat Due

Example Calculation:

Let's assume the current gold price is $70 per gram.

• Nisab Threshold: 87.48 grams * $70/gram = $6123.60
• Assets:
  • Cash & Bank Savings: $10,000
  • Value of Gold (50 grams * $70/gram): $3,500
  • Value of Silver (100 grams * $0.90/gram): $90
  • Investments & Shares: $5,000
  • Business Inventory: $2,000
  • Other Assets: $0
  • Total Assets: $20,590
• Liabilities:
  • Short-term Debts: $1,000
  • Immediate Living Expenses: $500
  • Total Liabilities: $1,500
• Net Zakat-eligible Wealth: $20,590 – $1,500 = $19,090
• Compare with Nisab: $19,090 (Net Wealth) is greater than $6123.60 (Nisab).
• Zakat Due: $19,090 * 0.025 = $477.25

This calculator provides an estimate based on the information you provide. For precise calculations and specific rulings, it is always recommended to consult with a qualified Islamic scholar or a local Zakat authority.