Zakat is one of the pillars of the Islamic faith. It means you donate some of your personal wealth to those in need. Zakat purifies your spirit and brings you closer to Allah, or God. Learn how to calculate your personal zakat so you can fulfill your spiritual duties.
1. Calculate the nisab. Nisab is the threshold or cut-off amount. If your personal wealth, or what you own, is more than the nisab, you owe zakat. If your personal wealth is below the nisab, you don’t owe zakat. You use either the current market price of gold or silver to calculate nisab. Always check current market rates, as gold and silver prices fluctuate
2. Determine your cycle dates. Zakat is an annual duty. It’s due one lunar year, or hijiri, from the first day you exceeded the nisab threshold or from the day you last paid zakat. For western, Gregorian and Hijri Date conversations, check out: IslamicFinder Hijri and Gregorian Calendar Date Conversions
3. Base your calculations on silver. Silver has a lower price than gold. Using silver for the nisab means you’re more likely to exceed the threshold. You’ll be able to meet your spiritual and moral duty to provide for those who are less fortunate.
For example, if each gram of silver is worth $0.66, the nisab using the silver calculation is $404.15 (612.35 grams X $0.66 = $404.15). More people would exceed this threshold rather than the gold threshold.
4. Know the difference between zakat and tax. Zakat is not a tax. It’s a spiritual act to help relieve people’s suffering. In many countries, paying zakat is voluntary whereas paying taxes is mandatory. Zakat directly helps the poor and needy.
1. Identify your assets. Start calculating your assets, or what you own. This is the first step is figuring out how much zakat you’ll pay. You exclude the assets you use for everyday life. For example, your primary residence, car, clothes and business equipment are not used in your zakat asset calculations. It’s based on what’s left after you take care of you and your family’s living expenses.
2. Identify your liabilities. Debt from credit cards, college or other loans subtracts from your personal net worth. These outstanding debts are deducted from your total zakat-eligible assets.
If you obtained a personal loan of any type (car, home, cash), then look at how much you pay per month to your creditors, not the entire outstanding debt.
Add up how much you owe each month to your creditors. Multiple this amount by 12 to calculate your annual liability amount.
3. Determine your zakat net worth. Subtract your liabilities from your zakat-eligible assets. For example, your assets for the year total $6,000 and your liabilities total $2,000. Your zakat net worth or zakat pool of money is $4,000 ($6,000 – $2,000 = $4,000).
1. Compare the nisab with your zakat net worth or pool. If your zakat net worth is more than the nisab, you owe zakat. If it’s less, you don’t owe this year.For example, your zakat net worth is $4,000. Each ounce of silver is currently worth $15, so the
2. Give a percentage of your zakat net worth. If you’re over the nisab threshold, give a minimum of 2.5% of your zakat net worth. Give more than 2.5% if you’re financially able.
3. Donate to reputable faith-based charities. To ensure your zakat is going to fellow Muslims in need, donate to a recognized and registered non-profit charity. Ask your local faith community for recommendations. Ask the charity how much of the zakat donations reach people in need, and what the charity’s process is for distributing funds.
The value of a car or a home that you rent out to others is also not considered. However, the income generated by any investment is considered.
Your personal home and car are not considered.
Any income generated from
compliant source, i.e. interest of bonds, is not considered. However, the value of any conventional financial obligation is considered.