Do I have to pay zakat if I have debt?
It depends on the debt, and scholars differ. A common modern approach is to subtract debts that are due now or within the coming year, such as bills, credit card balances and this year's loan payments, but not the whole remaining balance of a long-term mortgage or student loan. If what's left is still above the nisab, you pay zakat on it.
What the schools say
- Hanafi and Hanbali: debts reduce your zakatable wealth, because money you owe isn't really yours.
- Maliki: debts reduce zakat on cash, unless you have other non-zakatable assets that could cover them.
- Shafi'i (main view): debts don't reduce zakat; you pay on everything you hold.
Zakat is meant for people who can afford it, and Islam doesn't burden anyone beyond their capacity (Quran 2:286). The question is how to apply that fairly to modern long-term loans.
The common modern approach
Back then, debts were usually short-term. Today, many people carry 25-year mortgages and decades of student loans while holding savings. If they could subtract the whole balance, many comfortable people would never pay zakat. So many contemporary scholars say:
- Subtract debts that are due now: unpaid bills, rent due, tax owed, a credit card statement.
- For long-term loans, subtract only the payments due in the coming 12 months.
- Don't subtract the remaining future balance.
Long-term loans
For mortgages, student loans and car finance, use the next year's installments. Debts with interest should also be dealt with; see Can I still use my credit card after becoming Muslim? and Can I have a mortgage as a Muslim? If your debts are crushing and you're struggling, you may even qualify to receive zakat as a debtor. See Who can receive zakat?
A worked example
Omar has $12,000 in savings. His credit card bill of $800 is due, and his student loan payments over the next 12 months total $2,400. Zakatable wealth: $12,000 − $800 − $2,400 = $8,800. If that's above the nisab, his zakat is $8,800 × 2.5% = $220. See How do I calculate my zakat?
- Scholars differ on deducting debts.
- Many subtract debts due within the year.
- Don't subtract a whole long-term loan balance.
- Heavy debt may make you eligible for zakat.
People also ask
Do I pay zakat on money I'm saving for a house or wedding?
Yes. Savings for a goal still count if they're above the nisab for a year. The plan doesn't exempt the cash. Here's why.
Read the full answer →Do I pay zakat on money someone owes me?
If the borrower can and will repay, most scholars say yes, yearly or once you're repaid. Doubtful loans are treated differently.
Read the full answer →Do I pay zakat on my business?
Yes, on your stock for sale, cash and money owed to you, minus short-term debts. Equipment and premises are exempt.
Read the full answer →Do I pay zakat on rental property?
Not on the property's value. You pay zakat on the rent you've saved, along with your other cash. Property for resale is different.
Read the full answer →Do I pay zakat on gold jewelry I wear?
Scholars differ. The Hanafi school says yes; most others say no for jewelry worn normally. Gold kept as savings is zakatable.
Read the full answer →