Is Zakat paid once or repeatedly?

Question

If someone has $20,000 left in saving account in year 2022 (after they pay zakat for it), and in year 2023 they are able to save another $5000, should the zakat be given as 2.5% of the $5000 or 2.5% of the $25000? I noticed a similar question but with no answer. I would appreciate references and sources for the answer.

Answer 1

Zakat is similar to a wealth tax or property tax rather than an income tax. It needs to be paid every year as long as the amount is above the threshold of Nisab. So, if a person has possessed $25000 cash for a whole lunar year then he needs to pay $625 as Zakat. The next year (assuming no net income or expenditure) he will have $24375 left on which he must pay ~ $609 and so on.

There is consensus on it which is evidence by itself:

واتفقوا على أن الزكاة تتكرر في كل مال عند انقضاء كل حول حاشا الزروع والثمار ، فإنهم اتفقوا أن لا زكاة فيها إلا مرة في الدهر فقط

They are agreed that zakah must be paid repeatedly on all kinds of wealth at the end of each year, apart from crops and fruits, for which they are agreed that zakah must be paid only once.

^{— Maratib al-Ijma - translation from islamqa}

Also the texts on Zakat talk about possession rather than earning and do not differentiate between whether or not Zakat was paid on that wealth in the last year, such as:

فاذا كانت لك مايتا درهم وحال عليها الحول ففيها خمسة دراهم

When you possess two hundred dirhams and one year passes on them, five dirhams are payable.

_{— Abu Daud}

And it is corroborated by several other evidences, such as the advice:

ابتغوا بأموال اليتامى، لا تأكلها الصدقة

Trade with the orphan’s wealth so that it will not be consumed by Zakat.

^{— Sunan al-Kubra al-Bayhaqi}

As Zakat eating up the wealth would only be a concern if it was to be deducted from it repeatedly.