What this chapter covers

Zakat is the share of your wealth that Allah has given to the poor. It is the third pillar of Islam¹. Allah tells Nabi ﷺ: take charity from their wealth, to clean them and make them grow².

This chapter answers one question: what do I pay zakat on, and how do I count it? It goes through what people own today, one by one. Most of it is simple. Where scholars differ, we show the main views, so you can follow one with a clear heart.

The basics in one minute

• The rate is 2.5 percent, which is one fortieth. In the zakat letter of Abu Bakr: on silver, one fortieth, and nothing if it is under two hundred dirhams³. All the schools agree on this rate for money, gold, silver and trade goods.
• The nisab (the minimum before zakat is due). Nabi ﷺ said: when you have two hundred dirhams of silver for a year, pay five. For gold, nothing until twenty dinars, then half a dinar⁴. Today these weights are about 595 grams of silver and 85 grams of gold.
• The hawl (a full year). There is no zakat on wealth until a full year has passed while you own it⁵. This is a lunar year, about 354 days.
• Pick a zakat date, often in Ramadan. Each year on that date, add up what you own, and pay 2.5 percent if you are above the nisab.

Gold or silver nisab?

Both come from the sunnah, but today they give very different numbers.

• The silver nisab is much lower. Many scholars today advise it for cash and savings, because more people pay, and more reaches the poor. Our calculator starts with silver.
• The gold nisab is higher. Other scholars prefer it, as closer to what the nisab could buy in the time of Nabi ﷺ.

Either is valid. Follow your local masjid or a scholar you trust. Prices change every day, so the calculator shows today's nisab in your currency.

Cash and bank balances

Scholars treat today's money like the gold and silver coins of the past. Count:

• cash at home, in any currency,
• current and savings accounts, and money in apps and online wallets,
• money you have saved for something: a house deposit, a wedding, Hajj, school fees. It is still yours, so it still counts.

Count what you have on your zakat date. Money that came in during the year is simply added to the rest.

Interest (riba) in your account is not your wealth. Do not count it as zakat and do not keep it. Give it away to the poor without hoping for reward, and pay zakat on the rest.

Gold and silver

Gold and silver have zakat in themselves, in any form: coins, bars, or gold kept as savings. Allah warns about those who store up gold and silver and do not spend it in His way⁶. Ibn Umar explained that this is about wealth whose zakat is not paid⁷. Paid zakat makes the rest clean.

• Rate: 2.5 percent of the value on your zakat date.
• Value: what it would sell for today. Many scholars count only the pure gold in it. 24 carat is almost all gold. 22 carat is about 92 percent gold. 18 carat is 75 percent.
• Adding things together: most scholars add your gold, silver and cash together to see if you reach the nisab. Shafi'is count gold and silver separately. Most people today simply add up everything and use one nisab.

Jewelry, and gemstones

Here the schools have a well-known difference. It is about gold and silver jewelry that is worn, usually by women.

• The Hanafi evidence: a woman came to Nabi ﷺ with her daughter, who wore two heavy gold bangles. He asked: do you pay zakat on these?⁸. He asked Aisha the same about her silver rings⁹.
• The other schools point to Companions such as Aisha, who looked after girls with jewelry and did not pay zakat on it. They say zakat is on wealth kept to grow or to save, and jewelry in use is like clothes.

When all the schools agree zakat is due

• Jewelry kept as savings, to sell when money is needed, not to wear.
• Jewelry held for trade, as a jeweler does.
• Gold jewelry owned by a man to wear, since gold is not allowed for men to wear.

Some scholars of the three schools also say zakat is due on an amount far beyond what is normal in your community. If you hold a lot of jewelry, ask a scholar.

Some women of the other schools pay it anyway, to be safe. That is good, but not required. Follow your school, or a scholar you trust.

Diamonds, pearls and other gemstones

No zakat on diamonds, pearls, rubies and other stones, however expensive, unless you hold them to sell. In a diamond ring, only the gold or silver part is counted, and only in the way your school says.

Money owed to you

Money you lent is still your wealth. Scholars split it into two kinds.

A good debt

The person agrees they owe you, and they are able to pay you back.

• Most scholars: zakat is due on it every year.
• Shafi'is say pay it each year, even before you get it back.
• Hanafis and Hanbalis say you may wait until it is paid back, then pay for every year that passed.
• Malikis say that for a loan, you pay for one year when you get it back.

The simplest way: add good debts to your total each year, as if the money were in your bank.

A doubtful debt

The person denies it, keeps delaying, or cannot pay. You do not know if you will ever see it.

• You do not pay zakat on it now.
• If it comes back one day, scholars differ. Some say pay for one year. Hanafis say it simply joins your wealth and starts a new year. Others say pay for the years that passed.

Some scholars today take the middle view of one year, to be fair to both you and the poor. Follow a scholar you trust.

Shares and investment funds

For shares, it depends on why you hold them.

Shares you buy to sell soon

If you trade, buying shares to sell them for a profit, they are trade goods. Pay 2.5 percent of their full market value on your zakat date.

Shares you hold for the long term

If you keep them for years, for dividends or slow growth, scholars give two main ways:

• The full value way: pay 2.5 percent of the full market value. This is simple and safe, and many people use it.
• The company assets way: a company's buildings and machines are like work tools, with no zakat. So you pay only on your share of its cash, the money owed to it, and its stock, taken from its accounts. Some zakat bodies give a simple estimate for this.

Funds and ETFs work the same way. Dividends you received and still have on your zakat date are simply cash.

Pensions, a 401k, an ISA

These are new, and scholars today differ. The key question is: how much do you truly own and control?

A pension you cannot touch

Some pensions pay a fixed income later, and you cannot take money out now. Many scholars say no zakat until you receive it, because it is not in your hands yet.

A 401k, IRA, or a workplace pension pot

Here you have your own pot of money, but taking it out early has a penalty and tax. Scholars today give three main views:

• Pay on what you could take out today. Find the amount you would get after the early-withdrawal penalty and tax. Pay 2.5 percent of that each year. This is a common view today.
• Pay on the zakat part of what it is invested in. If the pot holds shares, use the rules for long-term shares above.
• Wait until you can reach it. Some scholars say no zakat until you are allowed to take it out without penalty. Then it is counted like your other wealth.

An ISA

An ISA in the UK is not a pension. It is a savings or investment account with a tax benefit, and you can usually take your money out. So:

• A cash ISA is cash. Count it in full.
• A stocks and shares ISA follows the rules for shares above.
• A Lifetime ISA has a penalty if you take money out early, so many treat it like a 401k.

Pick one honest way and keep to it each year. For large sums, ask a scholar you trust.

Crypto

Scholars today differ on crypto itself: whether it is allowed to buy and hold it at all. This chapter does not decide that question.

If you do hold crypto, most scholars who discuss its zakat say:

• Coins held as money or to sell for a profit are counted like cash or trade goods: 2.5 percent of the market value on your zakat date.
• Use the price on your zakat date, in your own currency, and add it to your other wealth.
• Some scholars treat tokens that are like a share in a project differently, like shares. If your holdings are large or unusual, ask a scholar.

Business stock

Goods you hold to sell are called trade goods. All four schools agree they have zakat, at 2.5 percent. Allah says: spend from the good things you have earned¹⁰.

How a business owner counts

• Stock: value it at the price it would sell for on your zakat date, not what you paid for it. This is the view of most scholars.
• Raw materials you will turn into goods to sell are counted too.
• Business cash in the till and the bank is counted.
• Money customers owe you is counted, if it is a good debt.

What is not counted

• Your shop, office, warehouse or land the business uses.
• Equipment, machines, vehicles, computers, shelves and furniture.

Debts the business owes

Scholars differ on taking debts away from your total. Hanafis, Malikis and Hanbalis allow it. Shafi'is say debts do not reduce zakat. Many scholars today take away only what is due now or in the coming year: bills, payments to suppliers, and this year's loan payments. Not the whole loan. Our calculator works this way.

In a partnership, each partner pays zakat on their own share, unless they agree to pay it together from the business.

Rental property, land, and what you use

Rental property

• The house or flat you rent out has no zakat. It is like a tool that earns for you.
• The rent you receive is cash. Whatever is left of it on your zakat date is added to your wealth.

Land or a house bought to sell

If you bought property to sell for a profit, most scholars say it is trade goods. Pay 2.5 percent of its market value each year. If you have not decided, or you bought it to live in or rent out, it has no zakat.

Your home, car and personal things

Nabi ﷺ said: a Muslim pays no zakat on his slave or his horse¹¹. From this, scholars say the things you use have no zakat: the home you live in, even a big one, your car, furniture, phone, clothes, and the tools of your work.

Farm produce and livestock

Crops, fruit and farm animals have their own zakat, with their own rates and minimums. For example, crops watered by rain give one tenth, and crops watered by the farmer give half of that¹². These rules are for people who own farms or herds. If that is you, ask a scholar for the details.

Common questions

I have a 401k in the US. Do I pay zakat on it?

Scholars today differ. Many say: pay 2.5 percent of what you would get if you took it all out today, after the penalty and tax. Others pay on the zakat part of the shares inside it, or wait until they can reach it without a penalty. Choose one way, and ask a scholar if the amount is large.

I live in the UK and have an ISA. Is it like a pension?

No. You can usually take your money out, so it is yours now. A cash ISA is counted in full, like any savings. A stocks and shares ISA follows the rules for shares. A Lifetime ISA, which has a penalty for early withdrawal, is often treated like a 401k.

I was given a gold set at my wedding. I only wear it at weddings and Eid. Is there zakat?

The gold is yours, so the question is for you, not your husband or parents. Hanafis say yes: count its gold with your other wealth. Malikis, Shafi'is and Hanbalis say no, as long as you keep it to wear, even if only on special days. If you keep it as savings, to sell when needed, all agree zakat is due. Your husband may pay it for you, with your permission.

I run a shop. I have stock, cash, and a bank loan. How do I count?

On your zakat date, add the stock at today's selling price, the business cash, and money customers owe you that you expect to get. Leave out the shop, shelves, equipment and van. Many scholars today then take away what you must pay this year, such as bills, supplier invoices and this year's loan payments, but not the whole loan. Pay 2.5 percent of what is left, if it is above the nisab.

I hold some crypto. How do I pay zakat on it?

Scholars differ on crypto itself, and we leave that question to your scholar. If you hold it, most who discuss its zakat say: take its market value on your zakat date and add 2.5 percent of it to your zakat, like cash.

My salary comes every month. Does each payment need its own year?

No. On your one zakat date, count everything you have, including last month's salary, and pay 2.5 percent.