How to Calculate Zakat: Nisab and the 2.5% Rate

Zakat is one of the five pillars of Islam: an annual obligation to give a fixed portion of your qualifying wealth to those in need. The principle is simple. The arithmetic is where people hesitate, mainly because it raises questions: what counts as wealth, what is the threshold, and what about debts? This guide walks through the standard method step by step.

A note before we start: this is general educational information, not a religious ruling. Schools of thought differ on some details, so if your situation is complicated, ask a qualified scholar.

The three ideas behind the calculation

1. Nisab. Nisab is the minimum amount of wealth you must hold before Zakat becomes due. If your net wealth is below it, you don't owe Zakat for that year. Nisab is defined in terms of precious metal: 87.48 grams of gold or 612.36 grams of silver. These are the figures most commonly cited.

2. Hawl. Hawl means that your wealth must stay at or above nisab for one full lunar year. Many people choose one fixed date each year, often in Ramadan, and calculate on that day.

3. The rate. For cash, savings, gold, silver, investments and business stock, the rate is 2.5% of your net zakatable wealth.

Which nisab should you use: gold or silver?

This is the question people get stuck on. Silver's nisab is a much lower amount of money than gold's, because silver is far cheaper per gram. So using silver means more people owe Zakat, and gold means fewer.

Many scholars and charities recommend the silver nisab, because it makes sure the poor aren't left out and it was the more common reference for ordinary people's wealth. Others use gold. Both are used in practice, so it's worth choosing one based on guidance you trust and applying it consistently.

You need the current market price of the metal to convert the grams into your own currency. Look up today's price per gram and multiply: for example, 612.36 grams multiplied by the silver price per gram gives the silver nisab in your currency.

Step 1: list what counts as zakatable wealth

Add up the following, as they stand on your Zakat date:

• Cash in hand and money in bank accounts, savings and current accounts
• Gold and silver you own as savings or investment. Many scholars treat jewellery worn regularly differently, so check the view you follow.
• Business inventory and trade goods held for sale, plus business cash
• Investments held for growth, such as shares, funds, or crypto assets you hold for investment. How to treat different investment types varies, so again follow your scholar's guidance.
• Money owed to you that you reasonably expect to be repaid

Step 2: what is generally not included

• The home you live in
• The car you use personally
• Everyday clothing, furniture and household items
• Tools or equipment you use to do your work (as opposed to goods you sell)

These are things you use rather than wealth you are holding.

Step 3: subtract debts that are due now

Subtract debts you owe that are due for payment soon, such as credit card balances, unpaid bills and loan instalments currently due. Whether to subtract the whole of a long-term loan, such as a mortgage, or only the amount due this year is a point on which opinions differ. A common and cautious approach is to subtract only the instalments due within the coming year.

Step 4: compare with nisab, then apply 2.5%

Take your total zakatable wealth, subtract your short-term debts, and compare the result to the nisab you chose.

• Below nisab: no Zakat is due this year.
• At or above nisab: multiply the whole net amount by 0.025.

Notice that the 2.5% applies to your entire net wealth, not only the part above nisab.

A worked example

Suppose that on your Zakat date you have:

• Savings: 8,000
• Cash at home: 500
• Gold held as investment, valued at 2,000
• Money a friend owes you and will repay: 500
• Credit card bill due this month: 1,000

Total zakatable wealth is 8,000 + 500 + 2,000 + 500 = 11,000. Subtract the 1,000 you owe: 10,000 net.

If your nisab, in the same currency, is 5,000, you are above it. Zakat due is 10,000 × 0.025 = 250.

Common mistakes

• Applying 2.5% only to the amount above nisab. It applies to the full net amount.
• Forgetting small pots of money, such as an old savings account, a digital wallet, or cash in a drawer.
• Mixing currencies without converting. Convert everything into one currency, using the exchange rate on your Zakat date.
• Using an out-of-date metal price. Nisab changes with the market, so check it each year.
• Not keeping a record. Write down your date, your figures and what you paid. It helps next year and keeps you consistent.

Doing the sums with a calculator

You can work all of this out by hand, but a calculator removes the arithmetic errors. The Zakat Calculator totals cash, gold and silver, investments, business assets and money owed to you, subtracts debts due now, and checks the result against the nisab value you enter. If your savings are in another currency, convert them first with the Currency Converter. For a similar worked-example approach to a different kind of money question, see how loan EMI actually works.

Paying it

Once you know the figure, Zakat is given to the categories of recipients named in the Quran, most commonly people in need. Many people pay through a reputable charity, which can also advise on the details, while others give directly. Whichever you choose, pay it with sincere intention and keep a note of it.

The short version

Choose a nisab (gold or silver) and a yearly date. Add up your zakatable wealth, subtract debts due now, and compare the result with nisab. If it's above, 2.5% of the net total is your Zakat. Keep a record, and ask a scholar about anything that doesn't fit these simple cases.