— Zakat on wealth earned during the year
Praise be to Allah
In order for zakaah to be due on money, two conditions must be met:
1 – That it reaches the nisaab (minimum threshold)
2 – That one year has passed since it reaches the nisaab.
If the money is less than the nisaab, then no zakaah is due on it.
If it reaches the nisaab, and one year has passed, i.e. a lunar (hijri) year has passed since the time when it reached the nisaab, then zakaah becomes due at that point.
The nisaab is the equivalent of 85 grams of gold or 595 grams of silver.
The rate that must be paid for zakaah is one quarter of one tenth (2.5%).
If the money reaches the nisaab and it is 1000 for example, then at the end of the year it is 5000, how should zakaah be paid?
1 – If this extra amount stems directly from the original amount, such as if the thousand was invested, and earned four thousand, then you should pay zakaah on the entire amount at the end of the year, because the profit on money is connected to the capital.
2 – If this extra amount did not stem directly from the original amount, rather it is money that was acquired by different means, such as an inheritance or a gift, or it is the price of something that you sold, and so on, then a separate year should be counted for it, starting from the day when you took possession of this extra amount. But if you want to pay its zakaah with the thousand, in advance, there is nothing wrong with that.
3 – This extra amount may come gradually, such as money that a person saves from his salary, so he saves 500 one month, and 1000 another month, until at the end of the year he has collected 4000. So you have the choice of paying the whole amount when one year has passed for the thousand, in which case you will have paid zakaah in advance for the money for which a year has not yet passed, or you can pay the zakaah for each sum separately when its year has passed, but this entails some kind of hardship, as you will be paying zakaah several times in one year.
For more information please see question no. 50801.
And Allaah knows best.
Zakaah is due on wealth if it reaches the nisaab (minimum threshold at which zakaah becomes due) and one full hijri year has passed since it reached the nisaab.
It says in Fataawa al-Lajnah ad-Daa’imah (9/281):
Zakaah must be paid on what is saved of an employee’s salary and reaches the nisaab by itself or when added to what the individual has of cash, when one year has passed since it reached the nisaab. End quote.
Shaykh Ibn Baaz (may Allah have mercy on him) said:
With regard to money that is being saved for marriage, or to build a home, and so on, it is subject to zakaah if it reaches the nisaab and one year has passed since it reached the nisaab, whether it is in the form of gold, silver, or paper currency, because of the general meaning of the evidence which indicates that zakaah is due on whatever reaches the nisaab, after one year has passed, without exception.
End quote from Majmoo‘ Fataawa Ibn Baaz (14/130).
Whether this money is kept at home, or is stored in a bank account, or otherwise, it is subject to zakaah, if it reaches the nisaab and one year has passed since it reached the nisaab.
The scholars of the Standing Committee for Issuing Fatwas said:
Zakaah must be paid on all kinds of wealth, whether it is saved in the bank or otherwise, if it reaches the nisaab by itself or when added to other kinds of wealth, such as trade goods and the like, and one year has passed since it reached the nisaab.
End quote from Fataawa al-Lajnah ad-Daa’imah (9/200)
Based on that, with regard to this wealth that is kept in the bank – whether it is in dollars or otherwise – it is subject to zakaah every year.
With regard to property that is prepared to be rented out, there is no zakaah on it; rather zakaah is to be paid on the rent, when one year has passed, if it reaches the nisaab by itself or when added to other wealth. Please see the answer to question no. 47760.
But if you spend this rent and do not save any of it, then there is no zakaah on it.
The same may be said about the money that you earn from tutoring: if you spend it and do not save any of it, there is no zakaah on it.
With regard to what you save, when one year has passed, zakaah is due on it.
With regard to the bonds or certificates, so long as you are keeping them for the purpose of benefiting from their profits and not for the purpose of trading in them, there is no zakaah on the capital or principles; rather zakaah is due on the profits or returns, if any of that is saved and one year passes. Whatever you spend of it before one year has passed is not subject to zakaah. For more information and important details on the topic of zakaah on shares, please see question no. 69912.
You should understand that zakaah does not decrease wealth. The Prophet (blessings and peace of Allah be upon him) swore an oath to that effect when he said: “Charity does not decrease wealth.” Narrated by Muslim (2588). In fact zakaah is a means of increasing wealth, bringing barakah (blessing) to it and warding off harm from it.
And Allah knows best.