drelansarym.com · Halal investing guides · Updated 2 Nov 2026

Zakat on stocks, ETFs and retirement accounts: a plain guide

Zakat is due at 2.5% on wealth above the nisab that you have held for one lunar year (hawl). Shares count as wealth. The open question is how much of a share's value is zakatable, and scholars give two main answers.

Nisab

The nisab is the value of 85 g of gold or 595 g of silver. Many scholars recommend the silver nisab because it is lower and benefits more of the poor. Price either metal on the day your zakat is due.

Method 1: You trade the shares (bought to sell)

Shares held for short-term trading are treated like trade goods. Pay 2.5% of their full market value on your zakat date.

Example: on your zakat date your trading account holds $8,000 of stock. Zakat = $8,000 × 2.5% = $200.

Method 2: You hold long-term (for dividends and growth)

AAOIFI Shariah Standard 35 lets the long-term investor pay zakat only on your share of the company's zakatable assets (cash, receivables, inventory), not on the full share price. Buildings, machinery and other fixed assets are excluded.

1. From the latest balance sheet: zakatable assets = cash + short-term investments + receivables + inventory.
2. Divide by shares outstanding to get the zakatable amount per share.
3. Multiply by the number of shares you own, then by 2.5%.

Some scholars hold that zakat on long-term shares is paid on full market value as well. If you can't get the balance-sheet data, paying 2.5% on full market value is the cautious option. Many people do this for simplicity.

ETFs and funds

Apply the same choice to each fund. For a long-term fund holding, some providers publish a zakatable-assets figure; if yours doesn't, use full market value.

401(k), IRA, ISA and pensions

Scholars differ here. One view: zakat is due on what you could access now (the balance minus early-withdrawal penalty and tax). Another view: zakat is due once you have access. Whichever you follow, use the same method every year.

Dividends and purification are separate

Purifying a dividend (giving away the impermissible share of it) is not zakat. Do both: purify first, then calculate zakat on what is yours.

Education, not a fatwa and not investment advice. Investing carries risk, including loss of capital. Where scholars differ we say so; ask a qualified scholar about your own situation. Written by Mohamed Elansary, PhD.