What is Zakat?
Zakat is the third of the Five Pillars of Islam. It is a mandatory form of almsgiving and religious tax required of all adult Muslims who possess wealth exceeding a certain minimum threshold (called the Nisab) for an entire lunar year (Hawl). Zakat purifies wealth and redistributes resources to those in need, fostering social equity.
Understanding the Nisab
The Nisab is the minimum amount of wealth a Muslim must own before they are obliged to pay Zakat. Historically, the Nisab was defined by the Prophet Muhammad (PBUH) as the equivalent value of either:
- Gold Nisab: 87.48 grams of pure gold.
- Silver Nisab: 612.36 grams of pure silver.
Because the modern value of silver is much lower than gold, most contemporary Islamic scholars recommend using the silver Nisab to determine eligibility, as it benefits the poor by ensuring more people contribute. Our calculator uses a dynamic approximation (roughly $4,500) for the silver Nisab, though you should check live silver prices for exact compliance.
How to Calculate Zakat (2.5%)
The standard Zakat rate on Zakatable wealth is 2.5% (or 1/40th) of your total eligible savings and assets. Zakatable wealth includes:
- Cash in hand and bank accounts
- Gold and silver jewelry (kept for wealth/investment)
- Shares, stocks, and crypto investments
- Business inventory and cash equivalents
Liabilities: You may deduct outstanding personal debts and immediate short-term liabilities from your total wealth before calculating the 2.5%.
Who Can Receive Zakat?
The Quran explicitly outlines eight categories of people eligible to receive Zakat (Surah At-Tawbah 9:60):
- The poor (Al-Fuqara)
- The needy (Al-Masakin)
- Zakat administrators (Al-Amilina 'alayha)
- Those whose hearts are to be reconciled (Al-Mu'allafatu qulubuhum)
- Those in bondage/slavery (Fir-riqab)
- The debt-ridden (Al-Gharimin)
- In the cause of Allah (Fi sabilillah)
- The wayfarer/stranded traveler (Ibnus-sabil)