Our Methodology
The whole calculation, and every place its inputs come from.
Zakat is not a tax on income, but rather a wealth tax. It is calculated annually on your accumulated, surplus wealth, meaning money or assets that have been sitting unused for a full Islamic lunar year.
- VZakatable Wealth
V = Σ (balance × price)
The total value of your portfolio at the end of the holding year (hawl). Includes all token balances multiplied by their current spot prices (SOL, liquid staking, stablecoins, etc.).
- NNisab Threshold
N = 85 g × gold price per gram
The minimum threshold to qualify for Zakat. Based on the classical standard of 85 grams of gold.
- ZZakat Due
Z = V × 2.5%, and Z = 0 when V < N
If V ≥ N, Zakat is owed on your full portfolio (V). If V < N, no Zakat is due.
You have completed the 1-year hawl with a portfolio value of $12,400.00. Because this exceeds the current Nisab threshold of $9,707.00 (85 g × $114.20), your wallet qualifies for Zakat. A 2.5% rate is applied to your full balance, resulting in a total due of $310.00.
When It Is Calculated and Due
- The Anniversary Date: You choose or track a specific lunar (Hijri) date every year as your Zakat anniversary.
- Reaching Nisab: Nisab is the minimum wealth requirement, usually equal to the market value of 85 grams of gold or 595 grams of silver.
- Continuous Holding: Your wealth must stay at or above the Nisab threshold throughout the entire lunar year.
- Early Payment: Many choose to calculate and pay their Zakat during blessed periods like Ramadan, even if their formal anniversary falls later.
Non-Zakatable Crypto Assets
- Dust under $5.00: Crypto "dust" (tiny fractions of coins left over after trades that are too small to be sold or transferred) is excluded. This is because you lack effective ownership: you cannot realistically spend or trade it, and it falls far below the Nisab threshold.
- Mints with zero value: Newly minted tokens or project coins that have no market price or liquidity are excluded. Zakat is only calculated on assets that have actual, realizable value on your Zakat calculation date.
- NFTs and Collectibles: Non-Fungible Tokens representing digital art, gaming items, or collectibles are generally exempt from Zakat, provided you bought them for personal enjoyment or utility.
- Exception: If you are actively flipping NFTs as a business or for short-term trade, they are treated as business inventory and become subject to Zakat.
- What you owe (Debts): Any immediate crypto liabilities, such as funds you borrowed via a DeFi lending protocol or margin trading debt, must be subtracted from your total crypto balance before calculating your Zakat.
