How to calculate zakat

Zakat is officially recommended to be at least 2.5% of your disposable income. 

Disposable income represents your net worth after family expenses. There is more detail below the calculator, but if you already know your net worth and expenses, please use the zakat calculator below. 

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1. Calculate if you owe zakat 

Zakat is only owed above the amount of nisab. Nisab is calculated by the price of either silver or gold.

Silver

The spot price of silver is (February, 23, 2021) is currently $27.88 per ounce and zakat is owed on your net worth above the value of 21 ounces.

At the time of writing, zakat will be owed if your net worth is above $27.88 * 21 ounces = $585.48

Gold

For gold, the current price is $1,806.04 per ounce. Zakat is owed above if you net worth is more than the value of 3 ounces of gold, which is worth $5, 418.12 at the time of writing (February 23, 2021).

2. Factor in your existing expenses

You exclude the assets you use in your day-to-day life. For example, a mortgage or rent, any transport costs, medical insurance and student loans are not used in your zakat asset calculations. It’s based on what’s left after you take care of you and your family’s routine expenses on an annual basis. 

Stocks, savings, business income or rental yields are examples of zakat-eligible income. 

Rent, commuting to and from work or medical costs should not be included in your zakat calculation.

3. Calculate your zakat

Now that you have established your net worth (as discussed in point 1) you can then subtract your existing expenses (point 2). The end result is your zakat-eligible residual. 

For example, if your net worth is $50,000 and your existing expenses total $40,000, the zakat residual is $10,000. 

Zakat is calculated as a recommended minimum of 2.5%, which in the example above is 2.5% of $10,000, or $250.

Now that you have calculated your zakat the last thing you need to do is to pick where it goes. 

If you choose WaterAid, your contribution will support clean water, decent toilets and hygiene services. Take a look at some of our recent projects!

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Tax-efficient ways to donate your Zakat

WaterAid offers two means of donations that are even more tax efficient than a traditional credit card transaction. 

Donate your Zakat in Cryptocurrency

Donating cryptocurrency is a non-taxable event, meaning you do not owe capital gains tax on the appreciated amount and can deduct it on your taxes.

Donate Stocks Online Instantly (no need to call your broker!)

Stock donations are another good option to support clean water projects and reduce your tax bill at the same time. Stock donations are highly tax-efficient if you've held the stock for more than a year and claim itemized deductions. Imagine that last year you bought some Apple shares for $10,000 and that today they are worth $20,000. If you donate the entire amount to a non-profit you can claim a charitable donation deduction of the current market value of the shares — the full $20,000. In addition, when you hold on to a share for more than 12 months, you would ordinarily have to pay capital gains tax on its appreciation amount. But if you donate the stocks instead of selling them, you won't have to pay any tax at all!

We use Overflow to allow seamless and easy stock donations, from your smart phone or computer. No need to call you broker!