Zakat on Retirement, Health, and Education Accounts The governing rule for zakat on retirement accounts is this: what you can access without penalty, you pay zakat on, and what you cannot access without penalty, you do not. Access without penalty is the trigger, not the act of withdrawal. Different account types, and even different portions […]
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Zakat on Stocks and Investments: A Complete Guide for Brokerage Accounts If you own stocks in a brokerage account, you pay zakat on them, but the calculation method depends on how you engage with the market. Active traders who frequently buy and sell pay 2.5% on the total market value of their portfolio. Long-term investors
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SAFE Notes, Convertible Notes, and Startup Equity: A Shariah Assessment If you invest in startups, work in one or have founded one, you likely hold equity that exists only on paper: a SAFE note, a convertible note, stock options, or unvested shares. Before asking when zakat is due on any of these instruments, the prior
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Zakat Before Liquidity: SAFE Notes, Options, and Unvested Shares The permissibility of SAFE notes, convertible notes, and equity compensation arrangements is addressed in Part 1 of this series. This article addresses a separate question: when do these instruments become liable for zakat, and on what basis does zakat remain deferred before that point? The Condition:
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Calculating Zakat on Startup Equity: The CRI Method and the Liquidity Event Parts 1 and 2 of this series addressed the permissibility of startup equity instruments and the conditions under which zakat is deferred before a liquidity event. This article addresses two remaining questions: how to calculate the base of assets liable for zakat when
Deducting Debt from Your Zakat Calculation: What Counts and What Doesn’t You may deduct certain debts from your zakat calculation, but not all debts qualify for deduction. The key distinction is between immediate liabilities that you must pay now and long-term obligations that extend into the future. Current debts with a human creditor who can
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Zakat on Cryptocurrency: Bitcoin, Ethereum, NFTs, and Digital Assets You pay zakat on cryptocurrency you hold, whether you characterize it as currency or as a digital asset. The rate is 2.5% of the full market value on your zakat date, calculated after the asset has been in your possession for one lunar year. This applies
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The Zakat Year: How Hawl Works and When Your Zakat Is Due The hawl (lunar year) is the temporal condition that governs when zakat becomes obligatory. Wealth that meets the nisab threshold does not become zakatable the moment it is acquired; it must remain in the owner’s possession for one complete lunar year before the
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Nisab: The Minimum Wealth Threshold for Zakat Nisab (al-nisab) is the minimum amount of wealth a Muslim must possess before being obligated to pay zakat. If your total zakatable wealth equals or exceeds the nisab threshold and you have owned it for one lunar year, you owe 2.5% of that wealth as zakat. If you
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Purification vs. Zakat: What to Do with Interest and Impermissible Income Contemporary zakat practice in Western Muslim communities is marked by a conflation of two independent obligations: the annual payment of zakat on lawful wealth and the purification (tathir) of impermissible earnings. Despite serving different functions, operating under different conditions, and directed toward potentially different
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