How to Calculate Zakat — Nisab, Rates & Worked Examples
What is zakat?
Zakat is an obligatory annual payment in Islam: a fixed share of accumulated wealth given to eligible recipients. For most wealth types it is 2.5% of what you own above the nisab threshold, held for one full lunar year (hawl).
The zakat formula
If your net zakatable wealth is below the nisab, no zakat is due for that year.
Step-by-step: how to calculate your zakat
- List your zakatable assets — cash at home and in bank accounts, gold and silver (jewelry included), investments, retirement funds you control, business inventory, and money lent to others that you expect back.
- Value them at today's prices — use the current market value of gold, silver and investments on your zakat date.
- Subtract immediate liabilities — bills, credit card balances and other debts due soon.
- Compare with nisab — the threshold is 87.48 g of gold or 612.36 g of silver, valued at today's prices.
- Multiply by 2.5% — apply the rate to the amount above nisab.
Worked example
Ayesha has: cash savings $8,000 · gold jewelry 40 g (≈ $3,400) · shares worth $2,600 · credit card balance $1,000.
Zakatable wealth = 8,000 + 3,400 + 2,600 − 1,000 = $13,000
Silver nisab (612.36 g ≈ $700) — she is well above it.
Zakat = 13,000 × 2.5% = $325
What counts — and what doesn't
| Zakatable (2.5%) | Exempt |
|---|---|
| Cash, bank balances | Your home you live in |
| Gold & silver (any form) | Personal car, clothing, furniture |
| Stocks, mutual funds, crypto | Tools of your trade |
| Business inventory | Debts you owe others (deducted) |
| Money you lent to others | Basic living expenses already spent |
Common mistakes
- Using the gold nisab when wealth is mostly cash — the silver nisab (lower in most price environments) is the safer, more generous choice.
- Forgetting forgotten savings accounts or dormant wallets.
- Deducting a full year of mortgage payments when only the next installment is due — follow the scholarly opinion you trust consistently.
- Changing the zakat date every year instead of keeping a fixed hawl.
The nisab thresholds in practice
| Standard | Weight | Illustrative value |
|---|---|---|
| Gold nisab | 85 g pure gold | $6,375 @ $75/g |
| Silver nisab | 595 g pure silver | $624.75 @ $1.05/g |
The dollar figures are illustrative only — gold and silver prices move daily, so check today's rate when your zakat date arrives. Because the silver nisab is usually far lower in cash terms, more people cross it and pay earlier; that is why many scholars recommend it for cash-heavy wealth.
A quick worked example: cash $8,000 + gold jewellery worth $1,500 + shares worth $2,500 = $12,000 zakatable pool. Silver nisab ≈ $625 → you are well above it. Deduct $1,200 of short-term debts you must repay now → net $10,800. Zakat = 2.5% × 10,800 = $270.
Note: Zakat rulings have legitimate differences of opinion across schools of Islamic jurisprudence. This guide covers the mainstream method; for complex situations (business partnerships, agricultural produce at 5%/10%, livestock) consult a qualified scholar.
Worked example: Zakat Calculator at its default inputs
This is the answer Zakat Calculator gives before you touch anything — the defaults as shipped, computed live rather than copied from a sample.
| Input | Default |
|---|---|
| Cash & Bank (PKR/AED) | 500000 |
| Gold/Silver Value | 300000 |
| Other Assets | 100000 |
| Debts Owed | 50000 |
Result: 21250 (2.5%)
The steps behind that answer
- Net wealth = assets − debts = 850,000
- Nisab applies (85g gold / 595g silver)
- Zakat = net × 2.5% = 21250
Cash & Bank (PKR/AED): half, as given, and half again
Cash & Bank (PKR/AED) is the first input worth testing, so here it is at three sizes.
| Cash & Bank (PKR/AED) | Result |
|---|---|
| 250,000 | 15000 (2.5%) |
| 500,000 | 21250 (2.5%) |
| 750,000 | 27500 (2.5%) |
The middle row is the default. The outer two show how far the answer drifts when cash & bank (pkr/aed) is wrong by half or by a half in the other direction.
Related guides
What is counted, and what is not
Zakat is due on wealth that has been held for one lunar year above the nisab threshold: cash, bank balances, gold and silver, business inventory, and investments held for trade. A primary residence, personal vehicle and household furnishings are not zakatable.
Debts you owe that are due now reduce the base. Debts owed to you are included if you expect to recover them. The details vary between schools of jurisprudence, so confirm the treatment of anything unusual.
The nisab and the lunar year
The nisab is the value of 87.48 grams of gold or 612.36 grams of silver, and most scholars recommend using the silver threshold because it is lower and includes more people in the obligation.
The hawl is one lunar year, about 354 days, not a solar year. Fixing a date in the Islamic calendar each year avoids the drift that comes from using a Gregorian anniversary.
The rate and the timing
The rate is 2.5% of the net zakatable wealth, or one fortieth. It is calculated on the wealth at the end of the hawl, not on income during the year.
Many people pay in Ramadan for convenience, which is permitted, but the amount still reflects the wealth at the due date. Choosing a date and keeping a simple annual record makes the calculation repeatable.
FAQ
Is zakat due on retirement accounts?
Scholars differ: many treat funds you can withdraw as zakatable at full value; others apply zakat only on accessible portions. Choose a consistent approach, ideally with scholarly guidance.
Can zakat be paid in installments?
Yes — spreading payment over the year is acceptable as long as the full amount reaches eligible recipients within a reasonable period.
Who can receive zakat?
The Quran (9:60) lists eight categories, including the poor, the needy, those in debt, and travellers in need. Family you already support (parents, children, spouse) cannot receive your zakat.
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