Fatwa ID: 831
Title: Tax or Zakat?
Category: Financial Transactions
Scholar: Dr. Ibrahim Dremali
Date: 10/13/2005

Question
I am a graduate student. If I made donation to some charitable organizations from Zakat al-maal and as I work as Teaching Assistant at university. I pay income Tax by the end of the year. When I report the donations in the tax form, does this mean that I have not paid the Zakat? I used the same money for two purposes. ( I do not know how the tax are calculated; I do not need to as my income is about 13,000$ a year.) Does the tax subtract the whole sum I donated from due tax? So If I donated $ 100 and the due taxes is $50 , will they refund me a $ 50? In that case do I still need to pay the zakat? Jazakum Allah Khairan

Answer

Praise be to Allah.

There is a difference between Zakat and tax. Zakat is the right of Allah and should be distributed among certain people if you have more than $850 during the year. If you don’t have this amount of money then you don’t have to pay Zakat. The Zakat is 2.5% of the above mentioned Nisab. Tax is the money you pay the government and it is not Zakat at all, because to my knowledge you pay it by your own choice.

Allah knows best.