How to Calculate Your Personal Zakat

Zakat is one of the pillars of the Islamic faith. Zakat literally means "alms", and there are different kind of Alm's, e.g. Zakat ul-Fitr (Alms of the fast-breaking) or Zakat ul-Maal (Alms of the Wealth). The implied Zakat that makes up the pillar of Islam is Zakat ul-Maal, which mandates Muslim to donate 2.5% of their personal wealth to those in need, annually.Muslims believe that Zakat purifies the spirit and brings them closer to God, and that not paying it makes your wealth "dirty" (haram).Learn how to calculate your personal zakat so you can fulfill your spiritual duties.^{[1]XResearch source}

Basic Terminology

Nisab is the wealth threshold your wealth need to reach before zakat must be payed for it.
Zakat Date - The hijri date for which your wealth exceed the nisab.
Hijri calendar - is the Islamic calendar used by Muslims, and is a lunar calendar.
Lunar year A year in the lunar (moon-based) calendar, which is typically around 10 days shorter than the solar (sun-based) year we are used too.
Hawl - A lunar year beginning at the zakat date. A lunar fiscal year if you will.

Part 1

Part 1 of 3:

Determining Your Wealth

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1
Identify your assets and calculate their value. Start calculating your assets, or what you own. 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]XResearch source}
- Example of Zakat-eligible assets include:
  - Money - anything no matter the source and if it is in cash or on any bank/savings-account.
  - Properties
    - Only Zakat-eligible if it is investment-property (buying with the primary intent to sell it for profit.
    - Property intended to live in or rent for others to live in is not zakat-eligible.
  - Precious metals such as gold or silver.
    - Jewlery that that you regularly wear and use is not zakat-eligible.
  - Stocks
  - Business Assets
    - as personal: money, property, current goods in stock, etc.
    - if you only own a share of the business, e.g. 50%, you only pay zakat for 50% of the total value.
- Please note, this is only an example, if you have more than a bit of cash, or in any other way are unsure what applies to you, ask your local mosque or find more information from an Islamic website you trust.
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.
- Please note, this is also an example - there may be varying opinions among scholars on what you may and may not deduct, depending on what Islamic-branch you follow (sunni, shia) and what school of jurisprudence you belong to (hanafi, Maliki, jafari etc...)
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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).

Part 2

Part 2 of 3:

Determining the Nisab value

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Nisab is the threshold of wealth that you must reach before having a religious duty to pay zakat - before your wealth is zakat-eligible.If your total, zakatable personal wealth exceed the nisab, you owe zakat. If not, then you don't owe zakat.

1
Check current market rates for Gold and Silver. Make sure to have an updated rate as gold and silver prices fluctuate.^{[3]XResearch source}
- Most Exchange rate websites also keep track of Gold and Silver with currency codes XAU and XAG respectively (1 XAU/XAG is 1 ounce of gold/silver).
2
Calculate the nisab cash values based on Gold and Silver. You can calculate both the gold-based and the silver-based nisab-value to compare them.
- The nisab-value can either be calculated based on gold, which is the value of 87.48 grams (3 ounces) of gold; or it can be calculated based on silver, which is the value of 612.36 grams (21 ounces) of silver.^{[4]XResearch source}
3
Choose and settle for one method of calculating the nisab (either gold or silver).
- Using the Gold-method gives you more margin before your wealth becomes zakat-eligible, and is a legitimate choice, but using the Silver-method you use the safer method, to be sure your wealth stays pure (halal), and that the needy receives something, even if small.
4
Determine your zakat date. If this is the first time you pay your zakat you need to determine your zakat date.
- Your Zakat date is ideally the day you reached the nisab.
  - However, if you aren't sure on exactly what date, you can approximate this and simply settle for an approximation.
  - If you don't even know when approximately you reached nisab and this is to complex/impossible to determine, simply adopt the date hijri date of today.
- You can see and map Islamic/Hijri dates to Christian/Gregorian dates on most phones, or in most prayer apps, but also on websites such as IslamicFinder Hijri and Gregorian Calendar Date Conversions
- Keep track of the date so you remember when it's due the next lunar year.
- You are due your zakat directly, but have one lunar year to pay your zakat, and you can do it in installments - just make sure that it is all payed before a hawl, a whole lunar year since your zakat date, has passed.
  - Many people choose a timing so that they pay zakat during holy month of Ramadan, since Muslims believe a good deed during the holy month has more weight on the scale of good deeds.

Part 3

Part 3 of 3:

Calculating Your Zakat

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1
Compare the nisab with your zakat net worth or pool.
- If your zakat net worth is more than the nisab, but a complete hawl, a lunar year, has not passed since you reached nisab for the first time (and determined a zakat date), you do not owe any zakat.
- If your zakat net worth is more than the nisab, and a lunar year, hawl, has passed since you first reached nisab you do owe zakat.
- If your zakat net worth is less than the nisab, you don't owe zakat this year, and your zakat date is null and void.
  - This means you now need to keep track of your wealth more regular than each year, to determine a new zakat date.
  - This also means, next time you reach you nisab, you determine you new zakat date, but don't owe zakat until a hawl has passed, and you still have a net-worth above the nisab.
2
Calculate the zakat. Zakat is 2.5% of your zakat-pool
- To calculate what 2.5% is of a sum, multiply your sum with 0.025, or divide your sum by 100 and multiply by 2.5
  - If your zakat pool is $4,000, then your zakat is $100 (4000*0.025 = 100 or (4000/100=40)*2.5 = 100)
3
Pay your zakat to a Zakat-conscious charity.
- This is important because Zakat ul-Maal has strict framework of who is eligible to receive zakat. Donating your zakat to e.g. an WWF or Wikipedia or any other organisation, that may very well need it, but falls outside this framework would not count as zakat.
- You may give zakat to your relatives if they themselves don't pay zakat (because they do not own wealth), but not to your parents, children nor siblings - those you are obliged to support by your own, non-zakat, means.
- You have a whole lunar year to pay your zakat, and you can pay them in installments if you want.

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Question
How do I calculate my personal zakat if I am a widow with no children or home of my own?
Community Answer
I believe you would do it the same way shown here, only counting what you actually own. If you have no home, though, I believe that it's highly likely that you wouldn't owe zakat.
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Can I subtract the mortgage amount on my residential property from the income?
Community Answer
Yes, but not the whole mortgage. For example, if you owe the bank $1,000,000, you wouldn't subtract the entire million; you would subtract what you owe that year (essentially the mortgage payments of that year). Some scholars debated about this issue but the this is the most common (and logical) fatwa. Although you owe the bank $1M, you don't plan to pay it back within a year (most likely over 30 years), so you can't be zakat-free for 30 years.
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Do I have to pay Zakat if I owe money to people and have not paid yet?
Community Answer
No, first you have to pay what you owe to people. After that you can focus on paying Zakat.
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Examples

Example 1.
- Jonas, 19, counts his money a couple of months after his first job, which incidentally are a couple of days after Eid ul-Fitr, 13 May 2021 (5th of Shawwal 1442).
- He finds he's net worth is $6,000.
- He calculates the nisab by the gold-method, and finds that 3 ounces of gold currently has a value of $5,400.
- He determines his zakat date to be 5th Shawwal and notes this down in his calendar and/or a piece of paper.
- Next year on 5th of Shawwal 1443, 6 May 2022, he calculates his zakat-eligible assets again and find he has a net worth of $12,000.
- The nisab is now $5,850, which he is well over.
- He calculates his zakat to be 12,000*0.025 = $300.
- Because he is going to buy a car, cash in a couple of month, which will set him back $15,000, so he postpones to pay his due zakat until Ramadan 2023, just a month before the next hawl, and within the permissible time.

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Your personal home and car are not considered.
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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.
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Any income generated from non shariah compliant source, i.e. interest of bonds, is not considered. However, the value of any conventional financial obligation is considered.
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