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.
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.