Zakat: Who Must Pay, How to Calculate It, and When to Give

Zakat is the third pillar of Islam and one of the most frequently mentioned obligations in the Quran, paired with prayer in dozens of verses. It is not charity in the voluntary sense — it is a fixed right that the poor hold over the wealth of those who exceed a minimum threshold. Unlike sadaqah, which may be given any time for any amount, zakat has precise conditions, a fixed rate, and a defined list of recipients.

Many Muslims want to fulfil this obligation correctly but are unsure about the details: what triggers it, what counts as zakatable wealth, how to perform the calculation, and when exactly it falls due. This guide answers all of those questions.

Who Is Obligated to Pay Zakat?

Zakat is obligatory on a Muslim who is: (1) adult (has reached puberty), (2) of sound mind, (3) free (classical scholars exempted enslaved people), and (4) in possession of wealth that meets two conditions: it reaches the nisab (minimum threshold) and a full hawl (one Hijri lunar year) has passed since it reached nisab. A child's wealth may still be subject to zakat in the Maliki and Shafi'i schools — their guardian pays it on their behalf.

The Nisab Threshold

The nisab is derived from two prophetic standards: 85 grams of gold or 595 grams of silver. For cash, savings, and trade goods, most scholars today use the gold or silver equivalent in the local currency. The gold nisab is typically higher than the silver nisab, meaning fewer people meet it. Many contemporary scholars lean toward the silver standard as it brings more people into the obligation and benefits more recipients. Check the current gold or silver price in your currency to find today's nisab. If your net zakatable wealth exceeds this value for a full lunar year, zakat is due.

What Wealth Is Zakatable?

• Gold and silver — in any form, including jewellery (obligatory in the Hanafi school; disputed in others — consult your local scholar)
• Cash and savings — all money in bank accounts, savings funds, and at hand
• Trade inventory — goods intended for sale, valued at their current market price
• Business assets and equity — the zakatable portion of business shares, calculated on the underlying assets
• Investments and stocks — zakat is due on the proportion of the investment that corresponds to zakatable assets (cash, inventory, receivables)
• Livestock — camels, cattle, sheep and goats above specific thresholds with separate rates
• Agricultural produce — 10% on rain-watered crops, 5% on irrigated crops, due at harvest

Your personal home, vehicle, clothing, professional tools, and household goods are not zakatable regardless of their value, because they are not held as wealth but as means of living.

How to Calculate Zakat on Cash, Gold, and Trade Goods

The rate on these categories is 2.5% of net zakatable wealth. The calculation follows four steps:

1. List all zakatable assets: cash, gold value, trade inventory at market price, relevant investment value.
2. Subtract debts that are immediately due (payable within the coming year).
3. Check whether the net total is above the nisab.
4. If yes, and one full lunar year has passed, pay 2.5% of that net total.

Example: Savings of £20,000 + gold worth £4,000 − a credit card balance of £3,000 due this month = net £21,000. Zakat due: 2.5% × £21,000 = £525.

When Is Zakat Due?

Zakat becomes obligatory when a complete Hijri lunar year has passed with your net wealth continuously above nisab. Track the hawl start date — the day your wealth first reached nisab — and pay on or before that anniversary each year. If your wealth dips below nisab during the year, the hawl resets from the next day it returns above nisab.

Most Muslims choose to pay in Ramadan because the reward for good deeds is multiplied in that month, and many charities facilitate efficient distribution during Ramadan. Paying early (once the hawl has completed) is valid, and paying after the hawl date without excuse is sinful. See our guide to Zakat al-Fitr, the separate per-head charity due at the end of Ramadan.

The Eight Categories of Zakat Recipients

Zakat may not be given to non-Muslims (except under the 'hearts to be won' category), to the wealthy, to one's own parents, children or spouse, or to Banu Hashim (the Prophet's ﷺ family), according to the majority of scholars. You may give zakat to other relatives who qualify, and doing so earns double reward — once for fulfilling zakat and once for maintaining family ties.