Zakat is 2.5% of your net zakatable wealth, once that wealth has reached the nisab and you have held it for one full lunar year (hawl). To calculate it, add up your zakatable assets (cash, savings, gold, silver, investments, business stock), subtract the debts you owe now, check the result against the nisab, and take 2.5%. You can run the numbers with our free Zakat calculator.
This guide explains each step in order, with worked examples. It follows the mainstream approach shared by most scholars, and points out where schools of thought differ.
What is Zakat, and who must pay it?
Zakat is the third pillar of Islam, an obligatory yearly payment from wealth to specific groups of people in need. It is mentioned together with prayer in the Quran, for example in Surah al-Baqarah (2:43). A person must pay Zakat if they meet four conditions:
- They are Muslim.
- They are free and of sound mind, with ownership of the wealth.
- Their zakatable wealth is at or above the nisab.
- They have held that wealth for one full lunar year (the hawl).
For the nisab itself, read our guide to nisab in gold and silver. The Zakat year follows the lunar (Hijri) calendar, which is about 11 days shorter than the Gregorian year. Many people pick one date each year, often in Ramadan, to calculate and pay. Our guide to Ramadan 2027 gives the date to plan around.
Step 1: Choose your Zakat date
Pick the date your wealth first reached the nisab, or any fixed date you will use every year. Use the same date each year, for example 1 Ramadan. On that date, count what you own.
Step 2: List your zakatable assets
Zakat is due on assets that grow or are held as wealth. Add up the following on your Zakat date:
- Cash in hand and in bank accounts (current, savings and fixed deposits)
- Gold and silver, as bars, coins or jewellery held as savings (see the note on jewellery below)
- Business stock and goods held for sale, valued at current market price
- Money owed to you that you expect to collect
- Investments, such as shares and funds held to sell or trade
- Cryptocurrency and other digital assets held as wealth
- Rental income saved in your accounts
Step 3: Leave out what is not zakatable
These are not counted:
- The home you live in, your car and your personal clothes and furniture
- Tools and equipment you use to earn a living
- Personal jewellery worn regularly. The Hanafi school counts it, while the majority view of the other schools exempts it. Follow the opinion of your scholar
- Property you rent out (Zakat is due on the savings from its income, not on the building)
Step 4: Subtract your debts
Deduct the debts you must repay soon, such as credit card balances, loans due within the next year, unpaid bills, wages and taxes you owe. For long-term loans such as a mortgage, most contemporary scholars deduct only the instalments due in the coming twelve months. The aim is to find your net zakatable wealth.
Step 5: Compare with the nisab
The nisab is the minimum amount. It is the value of 85 grams of gold or 595 grams of silver. If your net wealth is below the nisab, no Zakat is due. If it is equal or above, continue to the next step. Check today's gold or silver price on a reliable source to get the nisab in your own currency.
Step 6: Multiply by 2.5%
Zakat due = net zakatable wealth × 0.025. This is the same as dividing by 40.
Worked examples
The prices below are illustrative only. Use today's price when you calculate.
Example 1: Savings only
Amina has 14,000 in savings and owes 1,000 on a credit card. Net wealth is 13,000. If the nisab in her currency is 7,000, she is above it. Zakat = 13,000 × 0.025 = 325.
Example 2: Savings and gold
Omar has 6,000 in savings and 100 grams of gold bars. Gold is worth 90 per gram, so the gold is worth 9,000. Total wealth is 15,000. He has no debts. Gold alone already exceeds the nisab of 85 grams. Zakat = 15,000 × 0.025 = 375.
Example 3: Small business
Yusuf runs a shop. On his Zakat date he has 3,000 in the bank, stock worth 20,000 at its current selling price, and customers owe him 2,000 that he will collect. He owes suppliers 5,000. Net wealth = 3,000 + 20,000 + 2,000 − 5,000 = 20,000. Zakat = 20,000 × 0.025 = 500.
Example 4: Wealth drops below the nisab
Fatima reached the nisab in Muharram but spent most of it, and by her Zakat date she holds less than the nisab. No Zakat is due that year. Scholars differ on a case where the wealth dips during the year but is above the nisab again on the Zakat date. The Hanafi school requires the nisab only at the start and the end of the year. Most other schools say the year restarts if the wealth falls below the nisab at any point. Follow your scholar.
Common questions about specific assets
Zakat on gold jewellery
If you keep gold as savings or investment, Zakat is due on its value. For jewellery worn regularly, the Hanafi school requires Zakat. The majority of the other schools do not. Many Muslims choose the more cautious view and pay.
Zakat on shares and investments
Shares held to trade (buy and sell) are valued at market price on your Zakat date, and Zakat is 2.5% of that value. For shares held long term for dividends, many scholars apply 2.5% to the market value, while some allow Zakat on the zakatable share of the company's assets only. Ask a scholar or your Islamic finance adviser if you hold a large portfolio.
Zakat on a pension or retirement account
Views differ. If you can withdraw the money freely, many scholars treat it as zakatable. If you cannot access it until retirement, some scholars say pay when you receive it, while others say pay yearly on the accessible portion. Ask a qualified scholar for your case.
Zakat on salary
Zakat is not due on your salary as it arrives. It is due on what is left of it, in savings, once it has reached the nisab and passed a full lunar year. If you save monthly, many people pay on the total each year on one fixed date.
Who receives Zakat?
The Quran names eight categories in Surah at-Tawbah (9:60): the poor, the needy, those who collect Zakat, those whose hearts are to be reconciled, to free captives, those in debt, in the cause of Allah, and the traveller in need. Your own parents and children cannot receive your Zakat.
Quick formula
- Add cash, savings, gold, silver, investments, stock and money owed to you.
- Subtract the debts you owe now.
- If the result is at least the nisab (85 g gold or 595 g silver in value), multiply by 0.025.
- Pay it to those eligible, ideally in Ramadan, and keep a note for next year.
Frequently asked questions
How much is Zakat on 10,000?
If 10,000 is above the nisab in your currency and you held it for a full lunar year, Zakat is 10,000 × 2.5% = 250.
Is Zakat 2.5% of total savings?
Yes, of your net zakatable wealth after deducting debts you owe now, when it has stayed above the nisab for a full lunar year.
Do I pay Zakat every year?
Yes. As long as your net wealth stays at or above the nisab on your Zakat date, Zakat is due every lunar year.
Can I pay Zakat early?
Yes. Most scholars allow paying Zakat before the year is complete, as long as you are sure to reach the nisab. Many people pay in Ramadan.
Can I pay Zakat in instalments?
You may pay in several parts during the year, but it should not be delayed once it is due without a reason.
This guide is educational and not a fatwa. Circumstances differ, so consult a qualified scholar for complex cases.