In order for Zakāh to be required, a person must possess the minimum amount [niṣāb] of productive wealth required to pay it, which is the value of three ounces [or 85 grams] of pure gold [$3,775 on May 19, 2017]. Note that this amount fluctuates with the changing price of gold. A person who owns less than this amount, even if it covers their expenses, is generally not considered to be well off. The current value of gold can be looked up by checking the ‘spot market price’ at any distributor and should be checked on the day Zakāh is due.
When someone first acquires enough wealth that meets the minimum amount [niṣāb] for Zakāh, they should mark that date. After one lunar year, they look at how much wealth they possess. If they still exceed the minimum amount [niṣāb] they will pay Zakāh on 2.5% of that wealth.
Since a person’s wealth fluctuates throughout the year, the way this is calculated is to ensure that the minimum amount [niṣāb] is owned at the beginning and end of the Zakah cycle [ḥawl], similar to a fiscal year where only the beginning and end values matter. For example, Ali gets his first job in January and is paid $1,000 per month. When he receives his fourth paycheck on April 15th, he will mark his calendar because he will now have $4,000, which is above the minimum amount [niṣāb] for Zakāh. He now has 354 days [i.e. one lunar year] to save, invest, or spend that money however he likes. If on April 4th of the following year he still has more than the minimum amount [niṣāb], he must pay Zakah.
When paying Zakāh, the final amount at the end of the Zakāh cycle is taken into consideration, regardless of when the wealth came into possession. For example, Yusuf has $30,000 at the beginning of his Zakāh cycle. Two months later he loses $29,000, leaving his savings at only $1,000. However, three days prior to the end of the Zakāh cycle he gains another $5000. He must pay Zakāh on $6000. Another example is that Maryam has $10,000 at the beginning of her Zakāh cycle. One week before the end of the Zakāh cycle, she receives $90,000. She must pay Zakāh on $100,000.
In order to make calculations easier, a person may specify a specific date that is easy to remember [a day in Ramadan is usually chosen because it is easy to remember] to mark the date for Zakāh calculation. The original Zakāh date may be adjusted by paying early, before the Zakāh cycle is over.
If someone has forgotten when they first acquired the minimum amount [niṣāb], they should check their records and make a precautionary estimate of when that happened, and now be more vigilant about remembering the date. For example, Ali is supposed to pay Zakāh on April 4th since he possessed the minimum amount [niṣāb] for one lunar year. However, the month of Ramaḍān is in February and since he has a stable job he would prefer to recalibrate his Zakāh cycle to be in that month so he doesn’t forget to pay. He may pay his full Zakāh early in February and from that time on, pay it every Ramaḍān.
Zakāh must be paid out as soon as it is due and a person will be sinful for delaying it. However, it may be paid in advance. For example, Umar finds a family in need three months before his Zakāh is due. He gives them $2,000 with the intention of paying his Zakāh early. Three months later he calculates that he needs to pay $5,000 in Zakāh. He will deduct the $2,000 he paid early and only pay $3,000 Zakāh instead. Every individual is responsible for paying Zakāh on the wealth they possess. Each spouse is responsible for paying their own Zakāh, as are adult children. Also, partners in business will consider their portion of ownership in a business or property and pay Zakāh individually. For example, if ten people own an equal share in a home worth $30,000 that they plan to sell, then each of them owns only $3000. If this is less than the minimum amount [niṣāb], and they have no other productive wealth, they will not pay Zakāh.
Calculating Zakah is pretty straightforward:
- Add up your Zakatable assets
- Subtract the current liabilities
- Determine whether the remainder meets the minimum amount of 3 oz of gold value
- If so, pay 2.5% on the entire amount
The following represents a table you can use to help calculate Zakāh:
|Cash in possession:|
|Bank accounts balance:|
|Market value of all investments:|
|Value of Merchandise:|
|Receivables/Collectible Loans:||Current Debts/Bills:|
|Subtotal: _______ x 2.5%|
Here is a sample calculation of a person’s assets:
|Cash: $500 under bed; $100 in wallet|
|Checking account: $10,000|
|Market value of stocks: $5,000|
|Jewelry purchased for sale: $1,000|
|Loans Given Out: $2,000||Debts I Owe: $5,000; past-due rent: $1,000; electricity bill: $100|
|Subtotal: $12,500 x 2.5%|
|Zakāh Due: $312.50|
[Shaykh] Mustafa Umar