Muslims are required to give 1/40 of the monetary wealth (exceeding the nisab) they have held for an entire year. They are also required to give various percentages of agricultural products, livestock, and other goods.
Alms are to be distributed to specific groups according to the Qur’an:
Qur’an 9:60—The alms are only for the poor and the needy, and those who collect them, and those whose hearts are to be reconciled, and to free the captives and the debtors, and for the cause of Allah, and (for) the wayfarer; a duty imposed by Allah. Allah is Knower, Wise.
“Those whose hearts are to be reconciled” (al-Mu’allafatu Qulubuhum) refers to non-Muslims or to weak believers, to whom money is given in order to draw them to Islam. Ibn Kathir comments:
There are several types of Al-Mu'allafatu Qulubuhum. There are those who are given alms to embrace Islam. For instance, the Prophet of Allah gave something to Safwan bin Umayyah from the war spoils of Hunayn, even though he attended it while a Mushrik [idolater]. Safwan said, "He kept giving me until he became the dearest person to me after he had been the most hated person to me.” . . . Some of Al-Mu'allafatu Qulubuhum are given from alms so that they become better in Islam and their heart firmer in faith. For instance, the Prophet gave some of the chiefs of the Tulaqa' a hundred camels each after the battle of Hunayn, saying, “I give a man (from the alms) while another man is dearer to me than him, for fear that Allah might throw him on his face in the fire of Jahannam.” It is recorded in the Two Sahihs that Abu Sa`id said that `Ali sent the Messenger of Allah a gold nugget still in its dirt from Yemen. The Prophet divided it between four men: Al-Aqra` bin Habis, `Uyaynah bin Badr, `Alqamah bin `Ulathah and Zayd Al-Khayr, saying, “To draw their hearts closer.” Some people are given because some of his peers might embrace Islam, while others are given to collect alms from surrounding areas, or to defend Muslim outposts. (Tafsir Ibn Kathir, Commentary on 9:60)
Surah 9:60 also mentions “the cause of Allah,” which refers to jihad. Ibn Kathir notes: “In the cause of Allah is exclusive for the benefit of the fighters in Jihad, who do not receive compensation from the Muslim Treasury.”
During the time of the “Rightly Guided Caliphs,” Zakat was to be paid only to the legitimate Islamic ruler. Indeed, Abu Bakr regarded Muslims who refused to pay Zakat to him as apostates:
Sahih al-Bukhari 7284—Abu Bakr said, “By Allah, I will fight him who discriminates between Zakat and Salat (prayers), for Zakat is the compulsory right to be taken from the wealth. By Allah, if they refuse to give me even a tying rope which they used to give to Allah’s Messenger, I would fight them for withholding it.”
Today, in some Muslim countries, Zakat is collected by the state as a matter of law. In other Muslim countries (and in non-Muslim countries), Zakat is considered voluntary.