A step by step guide for understanding and calculating zakat
Step by Step Guide on Zakat in 2023
The following provides detailed descriptions on how Zakaat works and how to calculate it. Typically Zakaat is calculated at 2.5% of annual wealth. Always consult your local Mufti or Masjid for more clarifications as needed.
Please note, to achieve the best accuracy, this calculator always uses the cost of silver in real time to derive the nisab threshold value.
Calculate your Zakaat
Zakat or Zakat al Mal is a compulsory charity given to the needy annually. According to the Quran, it’s importance follows that of prayer. It is one of the pillars of Islam, it is obligatory and a duty on all eligible Muslims.
Distribution of Zakat should start with family first and then out to further as needed. The particular people that can benefit from the zakat are stipulated in the Qur’an (9:60). These are the poor, the needy, for those employed to administer it, for those whose hearts are attracted ˹to the faith˺, for ˹freeing˺ slaves, for those in debt, for Allah’s cause, and for ˹needy˺ travelers
Zakat is mandatory upon every Muslim that possesses wealth above the nisab (threshold) for a given year. In simple terms, Zakat is calculated as 2.5% percent of your savings and financial assets that are not used towards your living expenses (this is referred to as nisab threshold).
You can calculate nisab (threshold) in one of two ways 1) gold or 2) silver. The gold nisab is 3 ounces of gold and the silver nisab is 21 ounces of silver. If you have had this during the zakat year then you are eligible to pay zakat for that year.
You can calculate nisab in one of two ways gold or silver. The gold nisab is 3 ounces of gold and the silver nisab is 21 ounces of silver.
At the 5th February 2023, the gold price per ounce in US dollars is US$1,865.32 (see here). Therefore the gold nisab is US$5595.96
At the 5th February 2023, the silver price per ounce in US dollars is US$22.40 (see here). Therefore the silver nisab is US$470.40.
It is preferred to use the silver nisab as your threshold for zakat because it is the safer option and ensures more people enjoy zakat.
Please note, our zakat calculator uses real time silver prices to provide the most accurate calculation of zakat.
The general principle is that the responsibility of paying zakat belongs to the owner of the wealth. It is valid for zakat to be paid on behalf of someone else as long as there is an agreement between the two.
Zakat must be paid for a whole year. You can choose when the start and end dates to suit your circumstances. Most Muslims choose to pay their zakat in Ramadan or Dhul Hijjah to maximise their rewards. If this is the case then the start and end dates would coincide with the start and end dates of Ramadan and/or Dhul Hijjah.
If you received the pension or superannuation or have access to its balance to spend then it is included. Otherwise it should not be included until such time that you are able to spend from the balance.
If you have debts then generally it needs to be deducted from the wealth and if after the deduction you fall below the nisab then you are exempt from zakat that year. If the debts have agreed repayment schedules then you are to account for the repayment schedules that year rather than the entire debt owed. Therefore if your wealth is below the nisab after deducting the repayments for that year, then you are exempt from zakat.
For zakaat to be valid it must have been paid with the intention of it being zakaat. Otherwise it is a sadaqah. Indeed actions are in their intentions. So when you made previous donations they belong to the intention with which you made at the moment of donating.