Zakah and credit card debt

Question:
When I pay my yearly 2.5%, what if I have $10,000 in assets or cash?
But I owe $8,000 on credit card debt
Do I pay taxes on $10,000 or only on $2000?

 

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, Zakah is due on all Zakatable wealth after deducting one’s liabilities. Zakatable wealth includes cash, gold, silver, and business stock.

You state that you have an $8,000 credit card debt. You may only deduct the principle amount and not the charged interest amount.

For example, if the principle amount due is $7,500 and the interest amount is $500, then only $7,500 would be deducted from the Zakatable wealth and not the entire $8,000. Hence, if one has Zakatable wealth equal to $10,000, Zakah is due on $2,500.

And Allah Ta’āla Knows Best

(Mufti) Abdul Azeem bin Abdur Rahman

 

Disclaimer:

 

The Shar’a ruling herein given is based specifically on the question posed and should be read in conjunction with the question.

 

Darul Iftaa Texas bears no responsibility to any party who may or may not act on this answer and is being hereby exempted from loss or damage howsoever caused.

 

This answer may not be used as evidence in any Court of Law without prior written consent of Darul Iftaa Texas.

 

 

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