Is It Required to Deduct Taxes When Calculating Zakat?

No, taxes are generally not deductible when calculating Zakat unless they are overdue and must be paid immediately.

In other words, if your taxes are not due within the Zakat year, they should not be deducted when determining the amount of Zakat you owe.

Key points to understand:

• Only overdue taxes are deductible: 

If your taxes are due for payment within the current Zakat year, you can deduct them from your total assets. This is in line with the requirement that only debts that need to be paid within the year of Zakat are eligible for deduction.

• Not all taxes qualify: 

Taxes that are not due or payable in the immediate Zakat year cannot be subtracted from your zakatable wealth. These include future taxes or taxes that are due later, which should not be considered for deduction.

• Calculation of zakatable assets: 

When determining your Zakatable wealth, you need to account for all liquid assets, including cash, goods, and accounts receivable. However, unpaid taxes should not be included as liabilities in the calculation.

Hence, taxes are only deductible for Zakat if they are urgent and need to be paid immediately. If the taxes are due after the current Zakat year or not yet due, they should not be deducted from your assets when calculating the Zakat you owe. 

Always ensure that you only subtract liabilities that are genuinely due and payable within the relevant Zakat year.

And Allah knows best!