All praise is due to Allah Alone and may Allah exalt the mention of His chosen Prophet and bless him, his household, and his Companions.
Zakaah is one of the five pillars of Islam. Zakaah is mentioned together with Salah in eighty two (82) verses of the Qur'an. Allah says: "And perform the Salah and give the Zakaah."
The Prophet Muhammad r said: "Islam is based on five: "The testimony of Faith, the performance of Salah, the payment of Zakaah, the performance of Hajj, and the fasting of Ramadhan." - Buhkari & Muslim
Whoever denies that Zakaah is a pillar of Islam has left Islam and has become an apostate. The importance of Zakaah in Islam is undeniable and should not be underestimated.
The linguistic meaning of the word "Zakaah" in the Arabic language is "Purity" and it is known that taking Zakaah purifies excess wealth. However, it also means "Increase, thrive or grow" as a result of the blessings of Allah. The Islamic meaning of Zakaah is a certain percentage of excess wealth to be taken from the rich Muslims and given to the poor Muslims. It bridges the gap between rich and poor Muslims, and fosters brotherly love among them.
Zakaah is obligatory
It is incumbent upon every Muslim who owns the nisab (minimum amount) of wealth to pay its Zakaah. The nisab and the percentage of Zakaah to be taken from different types of excess wealth is clearly defined in the Qur'an and Sunnah.  For example, when a quantity of 85 grams or more of gold or 595 grams of silver or their equivalents of cash are held in possession for one year, a Zakaah of 2½ percent becomes due upon it, once the nisab has been reached.
It is not the purpose of this pamphlet to explain all of the different amounts of nisab and rates of Zakaah to be taken from cash, produce, livestock, commercial goods kept for sale, commercial real-estate, etc.  It should be kept in mind that Zakaah is usually not paid on things that we normally use in our lives, like the car we drive each day, the home we live in, the tools we use to do our job, etc.  If you are in doubt, do as Allah almighty ordered us in the Qur'an:  "ask those who know" (ask a reputable scholar).
Zakaah is not income tax, Do not confuse Zakaah with annual income tax. Zakaah is only due on excess wealth that has been in your possession for twelve (12) lunar months.  For example:   You had $1,000 savings at the beginning of the year.  During the year you earned $100,000. But you spent all the money on taking care of your family and such. At the end of one year you still had only $1,000 savings.  The Zakaah is due only on the $1,000 which you possessed for one full year, not on the amount you earned during the year. Allah has not made it forbidden to be wealthy and save excess money. However, if we save excess wealth, we must purify it annually by paying the Zakaah which is due on it. It should be noted that your Zakah can be paid at any time of year, as long as it is does annually.
Who receives the Zakaah:
The eligible recipients of Zakah are clearly defined in the Qur'an:  "The Zakaah is only for the poor, and the needy, and for those employed for collecting it, and those whose hearts are made to incline towards Islam, and for freeing slaves, and for those in debt, and in the cause of Allah, and for the wayfarer as a duty imposed by Allah, and Allah is All-Knowing, Wise." – (Surat attowbah (9) verse#60)
The Zakaah differs from charity in several ways: The Zakaah is obligatory, charity is voluntary. The Zakaah must be at least a certain percentage of certain types of wealth, charity is open to give as you like. The Zakaah can only be given to certain recipients, and it should be noted that these recipients should not be under your care, like your wife, children, etc. Charity can be given to anyone in need, including close family members. Zakaah must be given once each year, preferably at the same time each year. Charity can be given any time of the year, as you like.
Why pay Zakah?
A man said to the Prophet Muhammad r "Tell me about a deed which admits me to Jannah (Heaven)."  He said:  "Worship Allah ascribing no partner to Him, perform the Salah, pay the Zakaah and maintain good relation with your kinfolk." -At Tabarani
Warning against withholding Zakaah
Allah Almighty says: "And let not those, who withhold out of niggardliness what Allah has given them from His bounty, think that it is good for them; nay, it is evil for them. They shall have what they withhold out of niggardliness made to cleave to their necks on the Day of Resurrection." (Surat Aal-Imran(3) verse#180)
The Prophet Muhammad r said:  "Anyone who hoards wealth and does not pay it's Zakaah, his wealth will turn into sheets heated in Hell-fire with which his sides and forehead will be continuously branded until Allah judges between His slaves in a Day which is 50,000 years long.   After that he will either end up in Jannah (Heaven) or Jahannam (Hell)." - both Bukhari and Muslim.
Zakaat ul-Fitr
This is a special kind of Zakaah that is due at the end of the month of Ramadhan. Allah the Exalted has instituted Zakaatul-Fitr as a means of purification from nonsensical talk that one may have uttered during this month, as well as a food gift to the needy to save them the embarrassment of asking for it on the Day of Eid, thus the poor may celebrate the joy of Eid along with the rich.
It is incumbent on every Muslim who owns an excess of food over his needs. It must be given by the sunset of the last day of Ramadhan, or better yet, just before the Eid prayer. The recipients of Zakaatul-Fitr are the same as the recipients of the obligatory Zakaah. It is permissible, however, to give it out a day or two before the Eid day.
The quantity of Zakaatul-Fitr must be given out in foodstuff (NOT IN CASH), i.e., wheat, barley, dates, raisins, rice, maize, dried curd and the like. The best of which is what benefits the poor most, the quantity is approx. 2.4 kilograms per family member. For example, a Muslim man with one wife and three children would give at least 12 kilograms of Zakaatul-Fitr.
May Allah the Most High make us of those who fulfill their obligations to Him and guide us to what pleases Him always, amin.
With the compliments of
Edited and revised
Hamadi Al-Aslani
Manager of Editing and Translation
Jeddah Dawah Center