Zakat is not progressive.

Zakat is calculated as a flat rate on your liquid, surplus savings after expenses. It’s not progressive, meaning it doesn’t increase as your wealth increases. Someone with $1000 in savings pays 2.5% as does someone with $100,000 in savings. By maintaining this flat rate on surplus savings, we encourage spending, investment, and the flow of capital throughout the year.

Zakat encourages social stability. 2.5% of any savings we have after that will more than help to cover the needs of the poor and less fortunate, those that may not have that family structure to support them.

While we should be charitable, the Prophet ﷺ said “Start with those you care for.” If each one of us started with our immediate families, then our parents and grandparents, uncles and aunts, cousins, and other family members, how many people would be left in society to care for? We give priority to our families’ and communities’ security, and this allows us the permanence and strength needed to then help those out of our immediate reach.

Not everyone is liable for Zakat.

Zakat is not regressive; not everyone is liable for Zakat. Some people may have money, but that money is used for expenses throughout the year. Others may have savings, but that savings is not enough to make them liable for Zakat or is inaccessible to them. The Niṣāb is a minimum threshold amount used to determine whether a person must give Zakat or not. It is a floor used to measure whether or not you have to pay Zakat; if you have less than Niṣāb, you are not liable to pay Zakat but If you have more than Niṣāb, then you pay on the total amount in your possession.

You only pay on surplus wealth held for more than one year.

For most things that you pay Zakat on, you’ll only pay on them when they’ve been in your possession for a year or more. An entire lunar year should pass on any wealth or money that you own (that meets the conditions above obviously). This condition is mentioned in a Prophetic tradition narrated by Ibn Umar: “There is no Zakat on wealth unless a lunar year passes.” This narration is supported by the wide-spread established practice of the Four Caliphs and the remaining Companions of the Prophet ﷺ (May God be please with them).

There are a few exceptions to this rule, such as payouts that you get from businesses or investments made. Since they are the same type of wealth as the capital you invested, you merely add them to your ledger as an asset and calculate accordingly. So, if you have 5k USD in your account, and during the year you get paid a dividend of 350 dollars, just total it up to 5350.00 USD. This is the simplest and least problematic method of keeping a running tally of your money that you might pay Zakat on.

Here’s an Example

As of today's date (2/25/2024) the Nisab of silver in USD is $439.12. Therefore if you’ve had more than $439.12 in liquid wealth (cash savings, investments, etc.) then you are liable to pay Zakat. If this was your bank account, you’d look to see if you consistently have $439.12 or more for a year. If you do, you’ll pay Zakat of 2.5% of the entire amount in your account.

The amount below the Niṣāb, the minimum threshold amount, *is included* in the total you pay Zakat on, do not exclude it. I reiterate this because many people make this common mistake when calculating their Zakat. Zakat is paid on the *total* amount; however, to be liable to pay Zakat you have to have equal to or more than the Minimum threshold amount or Niṣāb (Niṣāb). For example, given the Niṣāb above, If you only have $250 then you won’t pay Zakat. If for example you have $700, then you’ll pay 2.5% of 700 dollars, which is $17.50. You pay 2.5% of the entire $700, not just the $400 above the Niṣāb.

How much is the Niṣāb and How can you calculate it in USD?

The Niṣāb is 200 dirhams for silver and 20 dinars for gold. To approximate these precious metals in modern measurements, scholars took a number of approaches. Some used the approximations mentioned in classical books that describe the approximate weight of silver and gold coins in the Prophetic era. Others looked to collating the actual weights of those coins that are found in museums around the world, taking the median weight of them while compensating for entropy (the natural loss of weight due to break down over time), to establish a more accurate standard for historical coinage analysis.

We’ve created a calculator to take these approximations of weight, then correlate them to the current price of gold and silver in USD.

You can access that calculator here (joebradford.net/nisab).

The Niṣāb amounts in the calculator are derived from the following authoritative sources:

- For the Hanafi school, according to the Fatwa of Mufti Muhammad Shafi of Deoband, the the Niṣāb is 87.48 grams of gold or 612.36 grams of silver.

- For the Shafi', Hanbali, Maliki schools, according to the Dar al-Ifta of Al-Azhar and of Jordan, the Mufti of the Federal Territory's Office of Malaysia, and the Wizārat al-Awqāf of both Morocco and the KSA, the Niṣāb is 85.0 grams of gold or 595.0 grams of silver. This is also the standard adopted by AAOIFI.

The gold and silver prices used are provided live from the LMBA (London Bullion Market Association). On the day you pay your Zakat, use this calculator to determine the minimum amount of liquid wealth you would have had to maintain for a year.

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