Can I deduct my own debts before calculating my zakat?

Scholars differ here, and it can meaningfully change your final number. The Hanafi school holds that debts due for payment within the coming year — credit card balances, short-term loans, unpaid bills — should be subtracted from your zakatable cash and assets before applying the 2.5% rate; only what remains above nisab after that deduction is zakatable. Long-term debts, like the remaining decades of a mortgage, are only deducted for the portion due within the year, not the whole outstanding balance. Other scholars, including many in the Shafi'i school, hold that debt does not cancel the zakat obligation on wealth you currently possess and control, reasoning that the poor's right in your wealth and your obligation to your creditors are separate matters, so you pay zakat on the full amount you hold regardless of debt. In practice, many contemporary zakat calculators follow the Hanafi approach of deducting only debts genuinely due within the zakat year, which tends to be the more commonly practiced position today, but if you carry significant debt it is worth seeking specific guidance.

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