Recently there was an argument that Zakat could not possibly be 2.5%, because of the following verse:
17:26 You shall give the due alms to the relatives, the needy, the poor, and the traveling alien, but do not be excessive, extravagant.
(٢٦) وَآتِ ذَا الْقُرْبَىٰ حَقَّهُ وَالْمِسْكِينَ وَابْنَ السَّبِيلِ وَلَا تُبَذِّرْ تَبْذِيرًا
The argument states, that if Zakat is only 2.5% how can one possibly ever be extravagant and excessive when giving the due alms? Therefore Zakat must be much higher than that. What this argument fails to understand is that the 2.5% is the bare minimum one must pay in order to stay in God’s graces and meet their obligation to fulfilling their Zakat requirements. The importance of this is specified in the following verse:
7:156 “And decree for us righteousness in this world, and in the Hereafter. We have repented to You. He said, “My retribution befalls whomever I will. But My mercy encompasses all things. However, I will specify it for those who (1) lead a righteous life, (2) give the obligatory charity (Zakat), * (3) believe in our revelations, and
وَاكْتُبْ لَنَا فِي هَٰذِهِ الدُّنْيَا حَسَنَةً وَفِي الْآخِرَةِ إِنَّا هُدْنَا إِلَيْكَ قَالَ عَذَابِي أُصِيبُ بِهِ مَنْ أَشَاءُ وَرَحْمَتِي وَسِعَتْ كُلَّ شَيْءٍ فَسَأَكْتُبُهَا لِلَّذِينَ يَتَّقُونَ وَيُؤْتُونَ الزَّكَاةَ وَالَّذِينَ هُمْ بِآيَاتِنَا يُؤْمِنُونَ
Individuals are free to give more and are even encouraged to do so if they can afford it, but are told not to be excessive and extravagant when doing so.