Zakat is 2.5% of your zakatable wealth, paid once a lunar year when your wealth reaches the nisab threshold. To calculate it: add up your cash, savings, gold, silver and trade goods, subtract debts due now, check the total is at or above nisab, and pay 2.5% of it to one of the eight groups named in the Quran. This guide walks you through each step, so you can work out your zakat with confidence.
What Is Zakat?
Zakat is the third pillar of Islam — an obligatory yearly charity on surplus wealth, not a voluntary donation. The Prophet ﷺ said:
بُنِيَ الْإِسْلَامُ عَلَى خَمْسٍ ، شَهَادَةِ أَنْ لَا إِلَهَ إِلَّا اللَّهُ وَأَنَّ مُحَمَّدًا رَسُولُ اللَّهِ ، وَإِقَامِ الصَّلَاةِ ، وَإِيتَاءِ الزَّكَاةِ ، وَالْحَجِّ ، وَصَوْمِ رَمَضَانَ
“Buniyal-Islāmu ‘alā khamsin: shahādati an lā ilāha illallāh wa anna Muḥammadan Rasūlullāh, wa iqāmiṣ-ṣalāh, wa ītā’iz-zakāh, wal-ḥajj, wa ṣawmi Ramaḍān.”
“Islam is based on (the following) five (principles): to testify that none has the right to be worshipped but Allah and Muhammad is Allah’s Messenger; to offer the (compulsory congregational) prayers dutifully and perfectly; to pay Zakat (i.e. obligatory charity); to perform Hajj; to observe fast during the month of Ramadan.” (Sahih al-Bukhari 8)
Allah links zakat with prayer again and again in the Quran:
وَأَقِيمُوا الصَّلَاةَ وَآتُوا الزَّكَاةَ وَارْكَعُوا مَعَ الرَّاكِعِينَ
“Wa aqīmūṣ-ṣalāta wa ātūz-zakāta warka’ū ma’ar-rāki’īn.”
“And establish prayer and give zakat and bow with those who bow [in worship and obedience].” (Surah Al-Baqarah 2:43)
The word zakat itself means purification and growth: by giving a small, fixed share, a Muslim purifies the rest of his wealth and shares it with those who need it most.
Who Must Pay Zakat?
Zakat is obligatory on a Muslim who is sane, adult, and owns zakatable wealth that reaches the nisab and has been held for one lunar year (hawl). You do not pay zakat on your home, the car you use, your clothes, or household furniture — only on wealth that can grow or be spent, such as cash, savings, gold, silver, trade stock and investments held for profit.
Step 1: Understand Nisab and Hawl
Nisab is the minimum amount that makes zakat due: the value of 85 grams of gold or 595 grams of silver. Because gold and silver prices change, the cash value of nisab changes too, so check the current price on the day your zakat falls due. If unsure which nisab to use for cash, ask a trusted local scholar.
Hawl is one lunar year (about 354 days) of owning wealth at or above nisab. Pick one date each year — many people choose Ramadan — and calculate on that same date every year. Wealth that comes in during the year is added to the total on your zakat date.
Step 2: Add Up Your Zakatable Wealth
On your zakat date, list everything that counts: cash in hand and in bank accounts; savings, including money set aside for a future purchase; gold and silver at their current market value; trade goods and business stock at their selling value; shares and investments held for profit, and money others owe you that you expect to receive; and rental income or business profits saved up. Add them all together — this is your gross zakatable wealth.
Step 3: Subtract Debts Due Now, Then Calculate 2.5%
Subtract debts and bills due immediately, such as a loan instalment due this month. Do not subtract a whole long-term loan — only the amount due within the coming year, according to most scholars. The result is your net zakatable wealth.
If it is below nisab, no zakat is due this year — though voluntary sadaqah is always rewarded. If it is at or above nisab, multiply it by 2.5% (or divide by 40). For example, on $10,000 of net zakatable wealth, zakat is $10,000 × 2.5% = $250. That is all: one-fortieth of your surplus wealth, once a year.
Step 4: Give It to the Right People
Zakat cannot be given to just anyone. Allah names eight groups in the Quran:
إِنَّمَا الصَّدَقَاتُ لِلْفُقَرَاءِ وَالْمَسَاكِينِ وَالْعَامِلِينَ عَلَيْهَا وَالْمُؤَلَّفَةِ قُلُوبُهُمْ وَفِي الرِّقَابِ وَالْغَارِمِينَ وَفِي سَبِيلِ اللَّهِ وَابْنِ السَّبِيلِ ۖ فَرِيضَةً مِّنَ اللَّهِ ۗ وَاللَّهُ عَلِيمٌ حَكِيمٌ
“Innamaṣ-ṣadaqātu lil-fuqarā’i wal-masākīni wal-‘āmilīna ‘alayhā wal-mu’allafati qulūbuhum wa fir-riqābi wal-ghārimīna wa fī sabīlillāhi wabniṣ-ṣabīl, farīḍatam-minallāh, wallāhu ‘alīmun ḥakīm.”
“Zakah expenditures are only for the poor and for the needy and for those employed for it and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveller — an obligation [imposed] by Allah. And Allah is Knowing and Wise.” (Surah At-Tawbah 9:60)
In practice, most people give to the poor and needy, to people in genuine debt, or to a trusted charity that distributes to these groups. Zakat is not given to your parents, children or spouse, nor to a wealthy person, nor to build a mosque — that is sadaqah, not zakat.
Common Mistakes to Avoid
Forgetting gold and silver. Cash is easy to count; jewellery and coins in a drawer are easy to miss. Include them at today’s value.
Using the Gregorian year. Zakat follows the lunar year, about eleven days shorter, so keep the same Hijri date each year.
Delaying payment. Once your zakat date arrives and the amount is worked out, pay it without delay.
Confusing zakat with sadaqah. Sadaqah is voluntary and can go anywhere; zakat is fixed, yearly, and restricted to the eight groups above.
Frequently Asked Questions
Do I pay zakat on my salary? Not on salary itself, but on what remains of it — savings, cash and investments — once it reaches nisab and a lunar year passes.
Do I pay zakat on my house or car? No, if they are for your own use. Only property bought to sell for profit counts as trade goods.
What if my wealth dips below nisab during the year? Then the hawl restarts when it reaches nisab again. If it stays above nisab all year, zakat is due on your zakat date even if the amount fluctuated.
Can I pay zakat in instalments? Yes, in advance or in parts during the year, as long as the full amount reaches eligible recipients by your zakat date.
Is Zakat al-Fitr the same as zakat? No. Zakat al-Fitr is a separate, small charity paid before Eid al-Fitr for every household member, while zakat on wealth is the yearly 2.5% described here.
What if I cannot work out the exact amount? Estimate carefully and slightly over rather than under, keep a simple record, and ask a knowledgeable scholar about anything complex, such as business stock or mixed investments.
Start Today
Zakat is simpler than it first looks: know your date, add up your wealth, subtract what you owe, check nisab, and give 2.5% to those Allah named.
If you would like your children to grow up understanding pillars like zakat alongside the Quran itself, book a free trial class with Noor Academy Pakistan — our qualified teachers teach Quran, Tajweed and Islamic basics online, at a time that suits your family, In sha Allah.
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