What is khums?

Where khums comes from

The word comes from khamsa, "five." Its basis is this verse, revealed after the Battle of Badr:

Khums in Sunni Islam

• Spoils of war. In a lawful war under a Muslim state, one-fifth of the spoils went to the public treasury for the groups named in the verse. This doesn't apply to individuals today.
• Buried treasure (rikaz). The Prophet ﷺ said that one-fifth is due on rikaz (Sahih al-Bukhari 1499). This means ancient treasure found in the ground, like a hoard of old coins. The Hanafi school also includes minerals found in land.
• Not on salaries or savings. Sunni scholars don't apply khums to normal income. Your yearly duty is zakat: 2.5% on savings above the nisab. See How do I calculate my zakat?

So if you dig up a hoard of ancient coins in your garden, scholars would say to give one-fifth to the poor and good causes, after following your country's treasure laws, which often require reporting such finds.

Khums in Shia Islam

Twelver Shia scholars read "anything you obtain" in the verse more widely, as any gain. They require 20% of a person's yearly surplus income, after living costs, to be paid as khums. Half is traditionally given to poor descendants of the Prophet ﷺ (sayyids), and half, called the share of the Imam, is paid to a senior scholar (marja) for religious and community needs. Shia Muslims pay this in addition to zakat.

Why the difference?

Both sides read the same verse. Sunni scholars understand its word "obtain" in the context of war, the setting in which it was revealed, while Shia scholars draw on narrations from their Imams that extend it to all profit. It's a long-standing difference, and Muslims can discuss it respectfully. See Do I have to choose Sunni or Shia to become Muslim?