Zakat Formula Explained

This reference explains the Zakat formula used by our free General Zakat Calculator. Use it to understand variables, units, and common mistakes before you calculate.

The formula

Zakat = 2.5% × (zakatable assets − liabilities above Nisab)

Variables and units

• assets — Total zakatable assets (cash, gold, investments, business inventory) (currency)
• liabilities — Short-term debts due within the year (currency)
• 0.025 — Zakat rate (2.5%)

Worked example

Inputs: $15,000 cash + $8,000 gold value − $2,000 short-term debt; Nisab threshold met

1. Net zakatable wealth = 15,000 + 8,000 − 2,000 = $21,000
2. Zakat = 21,000 × 0.025 = $525

Result: Zakat due = $525

When to use this formula

Use this formula when you need a quick zakat estimate with values you already know. Our General Zakat Calculator applies the same relationship automatically so you can verify handwritten work.

Common mistakes

• Calculating Zakat on non-zakatable assets (primary residence, personal car)
• Using gold price below Nisab threshold and skipping Zakat entirely
• Deducting long-term mortgage balance from zakatable assets

Frequently asked questions