Dr. Monzer Kahf, a prominent economist and counselor states: “Zakah is the third pillar of this religion. It is obligatory on each Muslim, male or female provided its conditions are satisfied. To be subject to Zakah you must own (outside exempt items that will follow) an amount called Nisab that equals approximately Euro 1000. Once you own this amount, you look a lunar year later (354 days) if then you have Euro 1000 or more you are required to pay Zakah on all the amount you have at the rate of 2.5%. This is repeated every year on that same date. This date sets what we call the fiscal year for one’s Zakah. This means Zakah is on savings and wealth.
Exempt items include every part of income a person spends (in contrast to saves), residence whether owned or rented, personal and household things like cloth, furnitures, appliances, personal and family transportation (be it a horse, a car or a plane as long as it is for personal transportation), women jewelry as long as it is in reasonable amounts and in use (in contrast to being hoarded or excessive compared to her peers).
In other words, Zakah is required on savings, long term savings (like managed retirement plans, investment, shares, business assets and inventory, etc.)
Of course, live stock and farm products are also subject to Zakah though the rates of their Zakah are a little different (generally higher).
There is also zakah of al-Fitr that is required at the end of Ramadan. It is obligatory on the head of the household. It is like a toll obligation per member of the household, the value of 2.24 KG of wheat, rice of a similar basic staple on the land. Here the Nisab is just having food of the day and any extra to give away.
Zakah is due to be given to any of the eight categories that are mentioned in the Qur’an 9:60. If you look at this verse you will notice that it is essentially different persons in need (of course except for collectors/distributors), this is why there are many Sayings of the Prophet (peace and blessings be upon him) that only mention the poor and needy. Hence I would say that it is due to be given to Muslim charities that specialize in helping the poor and needy, especially at our time because there are many of these around the world.”