Zakat is one of the Five Pillars of Islam and a major act of worship that purifies wealth and supports those in need. Every year, millions of Muslims ask the same essential question: how to figure out Zakat correctly? This guide explains in detail how to calculate Zakat using simple steps, including updated Nisab values in US Dollars, examples, deeper Islamic context, and clarification on what assets are Zakatable.
1. What Is Zakat and Why Do Muslims Pay It?
Zakat literally means purification and growth. It is a mandatory charity paid once every lunar year. Zakat removes greed, purifies wealth, uplifts the poor, and strengthens the Muslim community. Paying Zakat is not optional it is a divine obligation.
2. Understanding the Nisab (Minimum Threshold)
Nisab is the minimum amount of wealth a Muslim must hold for one lunar year before Zakat becomes due.
A. Gold Nisab – 87.48 grams
If gold is $75 per gram:
87.48 g × $75 = $6,561
Gold Nisab ≈ $6,560
B. Silver Nisab – 612.36 grams
If silver is $0.80 per gram:
612.36 g × 0.80 = $489.88
Silver Nisab ≈ $490
Most scholars recommend using the silver Nisab to allow more people to pay Zakat, increasing help for the poor.
3. Types of Wealth Requiring Zakat
Zakat is due on wealth that has the potential to grow. This includes:
A. Cash
Bank balances, digital wallets, foreign currency, and cash at home.
B. Gold and Silver
Jewellery, coins, bars even if worn daily.
C. Investments
Stocks, mutual funds, REITs, crypto, and Halal investment profits.
D. Business Assets
Inventory, raw materials, finished goods, business cash, and customer invoices.
E. Money Owed to You
Loans you expect to be repaid, unpaid salary, and rental income due.
4. Wealth That Does NOT Require Zakat
No Zakat is required on:
– Your home
– Personal car
– Furniture
– Clothing
– Electronics
– Tools used for work
These items are not considered growing wealth.
5. Step-by-Step: How to Figure Out Zakat
Step 1: Calculate Zakatable Assets
Cash in bank: $3,000
Cash at home: $200
Gold jewellery: $2,500
Business inventory: $4,000
Investments: $1,500
Money owed to you: $800
Total Zakatable Wealth = $12,000
Step 2: Subtract Immediate Debts
Rent due + bills + short-term loan payments + credit card balance = $1,500
Remaining Wealth = $12,000 – $1,500 = $10,500
Step 3: Compare With Nisab
Silver Nisab ≈ $490
Gold Nisab ≈ $6,560
$10,500 exceeds both thresholds → Zakat is required.
Step 4: Calculate 2.5%
Zakat = 2.5% of $10,500 = $262.50
Your Zakat due = $262.50
6. Who Can Receive Zakat?
Eligible recipients (Quran 9:60):
1. The poor
2. The needy
3. Zakat collectors
4. New Muslims
5. Those freeing slaves
6. People in debt
7. Those striving in Allah’s cause
8. Stranded travellers
You CANNOT give Zakat to parents, children, grandparents, grandchildren, or your spouse.
You CAN give Zakat to siblings, cousins, aunts, uncles, relatives, neighbours, refugees, students, and qualified charities.
7. Common Mistakes When Figuring Out Zakat
– Forgetting to include gold jewellery
– Not counting money saved for Hajj or weddings
– Ignoring receivable money
– Deducting the full mortgage (only yearly payment counts)
– Not including digital wallets or crypto
– Mixing business and personal accounts
– Not tracking business stock accurately
8. Additional Tips for Accurate Zakat Calculation
– Choose one fixed Islamic date every year to calculate Zakat.
– Use current market values for gold, silver, and investments.
– Keep a list of your Zakatable assets throughout the year.
– Give Zakat as soon as possible once it becomes due.
– Prefer giving Zakat to verified individuals before large organisations.
– Always ensure Zakat is given to eligible recipients only.
Conclusion
Understanding how to figure out Zakat becomes easy once you learn the steps: determine your Nisab, identify your Zakatable assets, subtract immediate debts, and calculate 2.5%. Zakat purifies wealth, supports the poor, and brings blessings into your life. By paying Zakat accurately and intentionally through Human Relief USA, you fulfil a major pillar of Islam and help uplift communities across the world.