To calculate zakat, fix a date, total your zakatable assets on that date, subtract what you may deduct, check the result against the nisab, and multiply by 2.5%. Zakat falls due once your qualifying wealth has reached a threshold called the nisab and a full lunar year has passed; Step 1 covers where views differ on the details.
The rate is the easy part. What makes zakat hard is everything before it: gathering a dozen figures from bank accounts, a jewelry box, a brokerage statement and maybe a shop’s stock shelf, all as of one date, and doing it again every year without losing last year’s working. That is the part a record solves. The Charitable Giving & Zakat / Tithing Records Workbook holds a zakat worksheet where you set your own nisab and rate and it nets the rest, beside a log of every gift you make toward it. If you only want to run one figure today, the free Zakat / Tithe Calculator does that.
This post walks through the calculation itself. For what zakat is, who receives it and how it differs from sadaqah, see what zakat is. Throughout, where scholars differ, the post says so and names the common positions. It is a guide to the arithmetic, not a ruling, and the choices marked as differences of opinion are yours and your scholar’s to make.
The zakat formula in one line
Zakat due = (zakatable assets − deductible debts) × 2.5%, provided the result is at or above the nisab.
Every step below is one part of that line. Do them in order, because the nisab check comes after the deductions: it is your net zakatable wealth that has to reach the threshold.
Step 1: Fix your zakat date
Zakat is assessed on what you own after a full lunar year has passed, a period called the hawl. A common approach, and the one the National Zakat Foundation’s guide to calculating missed zakat (PDF) (opens in new tab) uses, is to start from the date your wealth first reached the nisab: your first zakat falls due exactly 12 lunar months later, on the same Islamic date, and that date recurs every year as your zakat anniversary. If you remember only the month, the guide suggests the date in that month you think most accurate, or failing that the first of the month as a precaution. If you cannot determine any date, it says to choose a specific Islamic date and keep to it every year.
On your anniversary you take a snapshot of what you own and what you owe. The same guide keeps that anniversary only “so long as you have not had a deductible debt equal to or greater than your assets during the year,” and views differ on whether dipping below the nisab partway through the year restarts the count. Whichever date you settle on, put it in your calendar and keep it. A recurring life admin day is a natural home for it.
If your date runs on the solar calendar. The lunar year is about 11 days shorter than the solar one, so a Gregorian date slowly shortchanges the calculation. The National Zakat Foundation notes that under the AAOIFI Sharia Standards a solar year can be used (opens in new tab), in which case “Zakat should be paid at a rate of 2.577%” to cover the extra days, though it recommends the lunar calendar.
Step 2: Total your zakatable assets
On your zakat date, list every asset in the categories below at its value that day.
| Asset | How to value it | Where views differ |
|---|---|---|
| Cash, bank and savings balances | The balance on your zakat date | Little disagreement |
| Gold and silver held as savings (coins, bars) | Weight × today’s price per gram | Little disagreement |
| Gold and silver jewelry you wear | Weight × today’s price per gram, if you count it | Hanafi scholars count it; most others exempt customary personal jewelry |
| Shares and funds | Market value on your zakat date | How to treat long-term holdings versus shares bought to trade |
| Retirement accounts you own | Depends on the approach you follow (see Investments and retirement accounts below) | Opinions differ widely |
| Business stock held for sale | Its selling price, not what it cost you | Little disagreement on the principle |
| Money owed to you | The amount you expect to collect | Which kinds of receivable count |
Cash and savings
Cash, checking and savings balances count at what they hold on your zakat date, along with any cash you keep at home. Under the snapshot approach in Step 1 that is the whole balance, including money that arrived recently, though views differ on whether money that arrived during the year needs a full year of its own first. The common questions at the end of this post cover what to do if your scholar holds that view.
Gold, silver and jewelry
Gold and silver held as savings are zakatable whatever their form. Jewelry is where the schools part ways. The Zakat Foundation of America’s position is that women pay no zakat on jewelry they wear in customary amounts (opens in new tab), while noting that “some scholars, including the Hanafis, consider gold and silver Zakatable wealth, regardless of their form.” Decide which view you follow once, write it down, and apply it the same way every year.
Investments and retirement accounts
Shares and funds are generally counted at their market value on your zakat date, though scholars differ on long-term holdings, where some guides count only the share of the company’s own assets that would be zakatable. Retirement accounts are the most contested line on the list. In the UK, the National Zakat Foundation holds that defined contribution pensions are zakatable and defined benefit pensions are not (opens in new tab), on the reasoning that the member owns the funds in a defined contribution scheme (opens in new tab).
For a defined contribution pension, the foundation’s missed-zakat guide (PDF) (opens in new tab) counts only the zakatable assets inside the fund. Where the pension portfolio consists only of equities, it suggests taking a fixed share of the fund’s market value as a proxy for those assets, and count that share, not the whole balance, in your Step 2 total. The guide is not consistent on the share: one passage says 25% and a later one says 40%. NZF’s pension zakat page (opens in new tab) points to its calculator for working out which assets in a fund are zakatable, which is the better route when you can get the fund’s breakdown. How any of this maps onto an account with withdrawal penalties and tax due on the way out is a question to take to your scholar rather than settle from a blog post.
Business stock and money owed to a business
If you run a small business — a craft shop, a bakery, a resale stall — its zakatable assets count toward your total. The National Zakat Foundation’s 2025 business zakat guide (PDF) (opens in new tab) lists the ones that require zakat as cash, money owed to the business for a cash loan, outstanding invoices for goods and stock, and stock bought to resell. It lists money owed to the business for services, prepaid expenses, fixtures and fittings, equipment and intangible assets such as trademarks as not zakatable.
Two points in that guide catch most small sellers out:
- Stock is valued at its selling price on your zakat date, not at cost. A shelf of finished goods that cost you $1,000 to make and will sell for $3,000 counts at $3,000.
- Dead, damaged and unfinished stock is valued as it stands. The guide values dead stock, damaged stock and work in progress “at their current state and their value in that state,” not at what they would fetch once finished.
That makes zakat one more reason to know what is actually on your shelves, which is the whole argument of the inventory trap.
Step 3: Subtract what you may deduct
Certain debts come off the total before the nisab check. Schools differ on how far debts reduce zakat, so what follows is one approach rather than the only one: the National Zakat Foundation sets it out in its business guide, and applies the same treatment to personal long-term debts such as mortgages in its missed-zakat guide (PDF) (opens in new tab). It allows:
- Debts payable in full within the next 12 months, such as a card balance or a supplier invoice.
- Twelve months of installments on a long-term debt, such as a car loan or a mortgage, not the whole outstanding balance.
- Arrears you already owe.
Only the non-interest portion of a repayment can be deducted. The business guide (PDF) (opens in new tab) also advises against taking off anything you do not need to: debts due within the next 12 months “should only be taken off your Zakat amount if you won’t be able to pay off the debt because of the Zakat payment.” Here “taken off” means deducted from the assets you totaled in Step 2, before the nisab check. Future bills and expenses you have not yet incurred, such as next month’s rent, cannot be deducted at all.
Step 4: Check your net wealth against the nisab
The nisab is defined as a weight of gold or silver, not a sum of money, so its dollar value moves with the metal price. According to the National Zakat Foundation, the nisab is equivalent to 87.48 grams of gold or 612.36 grams of silver (opens in new tab), with another opinion putting it at 85 grams of gold or 595 grams of silver.
Which metal you use matters far more than which gram figure. Because silver is now so much cheaper than gold relative to their historical ratio, the silver nisab is a fraction of the gold one, and many more households cross it. Both the National Zakat Foundation and Islamic Relief Canada recommend the silver nisab (opens in new tab), Islamic Relief because “more people are likely to be eligible for zakat, which means more money benefiting the poor and needy.”
To convert, multiply the gram figure by today’s price per gram of that metal: a spot price from a bullion dealer or a financial news site, or the nisab value your zakat organization publishes, if it publishes one. If your net zakatable wealth from Step 3 is at or above the result, zakat is due. If it is below, none is due this year.
Step 5: Apply the rate
Multiply your net zakatable wealth by 2.5% if your zakat date follows the lunar year, or by 2.577% if it follows the solar calendar (Step 1). The rate applies to the whole net amount, not just the portion above the nisab.
Step 6: Record what you calculated and what you gave
Write down the date, each figure, the nisab you used and the price you converted it at, the amount due, and then every payment toward it, with the date and recipient. This record is what makes next year’s calculation take minutes instead of an evening, and it is what lets you see at a glance whether this year’s zakat has been paid in full or is still partly outstanding.
It is also where a spreadsheet earns its keep. A blank one has to be rebuilt each year, and an app holds some of your most private financial and religious records on someone else’s server. The Charitable Giving & Zakat / Tithing Records Workbook is the middle path: a file you own, with a zakat worksheet that takes your own nisab and rate and nets your zakatable wealth, and a giving log that totals what you have given against it. If you also itemize gifts for tax purposes, tracking charitable giving for taxes covers the receipts worth keeping.
A worked example: calculating zakat for a household with a side business
The household follows the view that worn jewelry is exempt, and counts its long-term shares at full market value. For simplicity the example deducts both of its debts; under the condition in Step 3, you would deduct them only if paying zakat would otherwise leave you unable to repay them.
| Line | Amount | Step |
|---|---|---|
| Checking and savings balances | $14,200 | 2 |
| 10 g gold coin held as savings, at an illustrative $110/g | $1,100 | 2 |
| Gold jewelry worn by the household | $0 (exempt under the view it follows) | 2 |
| Shares, market value | $8,000 | 2 |
| Craft business: finished stock at selling price | $3,000 | 2 |
| Craft business: unpaid invoice for goods already delivered | $400 | 2 |
| Total zakatable assets | $26,700 | 2 |
| Card balance due this month | −$1,200 | 3 |
| Next 12 months of car-loan principal (interest excluded) | −$3,600 | 3 |
| Net zakatable wealth | $21,900 | 3 |
| Silver nisab: 612.36 g at an illustrative $1.50/g | $918.54 | 4 |
| Above the nisab? | Yes | 4 |
| Zakat due at 2.5% (lunar year) | $547.50 | 5 |
| Zakat due at 2.577% (solar year) | $564.36 | 5 |
At an illustrative $110 per gram, the gold nisab would be 87.48 × $110 = $9,622.80, and this household is above that too. The choice of metal matters most for smaller balances: a household with $4,000 of net zakatable wealth owes $100 on the silver nisab and nothing on the gold one.
Common Questions About Calculating Zakat
Do I pay zakat on my whole balance or only the savings I have held a full year?
Under the snapshot approach, you take the whole balance on your zakat date rather than tracing when each dollar arrived, though views differ on whether money that arrived during the year needs a full year of its own first. If your scholar gives new money its own year, note the date each large sum arrived so you can assess it when its year completes.
Is zakat due on money in a retirement account?
Opinions differ, and this is one of the questions most worth taking to a scholar. The UK’s National Zakat Foundation treats defined contribution pensions as zakatable and defined benefit pensions as not, and counts only the zakatable assets inside a defined contribution fund. Other scholars and calculators take different approaches, so choose one with guidance, record it, and apply it consistently.
What if I missed paying zakat in past years?
The National Zakat Foundation treats missed zakat as a debt that is still owed, so work out each missed year separately, using that year’s figures and nisab as best you can reconstruct them. Its guide to calculating missed zakat (PDF) (opens in new tab) works through it year by year, says to estimate to the best of your ability where you cannot remember an amount, and subtracts each year’s unpaid zakat from the total before working out the next. This is exactly where a kept record pays off: a year you wrote down is a year you never have to reconstruct.
