How to Calculate Zakat on Cash

counting money from wallet blog 11 9 22

Is Zakat due on cash?

The short answer

Yes. Cash is the easiest asset to use to grow one’s wealth (mal), and Zakat comes due on all growing and producing wealth. Zakat comes due on cash that meets three conditions:

  1. It has reached its threshold amount (niṣâb) – the value of 85 grams of gold.

  2. It has reached its maturity date – one Islamic lunar year (hawl), about 354 days.

  3. It has one sole owner that has full right over it.

(See Is Zakat Due on All Wealth? and also What Requirements Qualify Wealth for Zakat?)

How do you count your cash for Zakat?

Cash includes all the money you have on your person, in a bank, at home, at your place of business, in a coin jar, car, or any other possible holding place.

If your personal cash wealth and business cash wealth both separately add up to nisab, the currency value of 85 grams of gold, one adds them together and pays Zakat on their total.

If your personal cash wealth and business cash wealth do not separately reach nisab, one adds them together, and if they total the nisab value, one pays Zakat on them.

Cash, both business and personal, is calculated for Zakat by adding it to all other monies you own in any form, including pension plans, 401Ks, and all forms of retirement accounts; stocks, bonds, life insurance policies, and investments; cryptocurrencies; gold, silver, and precious metals; and, in general, all forms of stores of value.

If any or all of these together equal the nisab threshold, one pays Zakat on the total sum, all considered as cash.

For more details about restrictions on retirement accounts and Zakat calculation see Is Zakat Owed on 401K Plans and Individual Retirement Accounts? For Cryptocurrencies and Zakat calculation go here.

What is the Zakat rate on cash?

The Prophet, on him be peace, set the Zakat rate on cash and currency equivalents at 2.5%.

How is nisab determined for Zakat?

The Prophet, on him be peace, set the nisab threshold amounts for all wealth-types subject to Zakat.

Here’s a simple formula to determine nisab for cash. Remember, you must total all your monetary equivalent forms of wealth together to see if your “cash” reaches Zakat’s nisab threshold.

  • Gold price per gram US$ x 85 grams = Nisab (most precise)

  • Gold price per troy ounce US$ x 2.73295 t oz = Nisab 

Here are the nisab equations based on current price per measure (20 Oct 2022, 4:45 a.m. CST):

  • $52.98 (gold price per gram) x 85 gm = $4,503.03

  • $1,648 (gold price per troy oz) x 2.73295 t oz = $4,503.90

So, if all your cash equivalent holdings for the Zakat period equal or exceed this amount, you must pay 2.5% of your total in Zakat.

See Nisab and Zakat Calculation in a Nutshell for a more detailed account for this calculation.

For a comprehensive explanation of Zakat calculation see How Is Zakat Calculated on Wealth?

Pay Your Zakat To calculate your Zakat payment today, use our Zakat Calculator here.