Short answer
The mainstream Hanafi fatwa is that Muslims should not celebrate New Year's Eve, because the parties, countdowns, drinking and fireworks come from non-Muslim custom and usually involve haram. Enjoying the day off or reflecting on the year is fine. Some contemporary scholars treat 1 January as a neutral calendar date and allow a quiet family gathering free of haram.
Joining New Year celebrations is not permissible in the fatwas of Deobandi institutions, because it imitates a festival of non-Muslims and usually involves alcohol, music, mixing and waste. Having the holiday off work, or using the date to review one's life, carries no sin.
The four schools agree on this.
Explanation
Islam gave Muslims two festivals. When the Prophet ﷺ came to Madinah and found people with two days of play, he said Allah had replaced them with something better: Eid al-Adha and Eid al-Fitr. The scholars took from this that Muslims should not adopt the yearly festivals of other communities. The Hanafi books discuss Nayruz, the Persian New Year, and warn that honouring it as a festival endangers a person's faith.
The Gregorian New Year is now largely secular, but the way it is celebrated is the problem:
- Countdown parties usually centre on alcohol, music and mixing, and a Muslim should not "witness falsehood".
- Fireworks and lavish parties waste money, and the Quran calls the wasteful brothers of the devils.
- Copying a people's distinctive celebrations falls under the hadith "whoever imitates a people is one of them".
What is fine:
- Taking the public holiday off and spending it with family as on any other day off.
- Making plans and resolutions. Self-review is encouraged in Islam at any time of year.
- Turning down the countdown party politely. A Muslim does not sit where alcohol is being served.
Some respected contemporary scholars see 1 January as a calendar date with no religious meaning and allow a simple gathering with no haram in it. Both views agree that drinking, music and immoral parties are haram on any night. For greetings, see can Muslims say Happy New Year? For the Hijri new year, see the Islamic New Year.
The evidence
Quran, Surah Al-Furqaan 25:72
وَٱلَّذِينَ لَا يَشْهَدُونَ ٱلزُّورَ وَإِذَا مَرُّوا۟ بِٱللَّغْوِ مَرُّوا۟ كِرَامًۭا ﴿٧٢﴾
And [they are] those who do not testify to falsehood, and when they pass near ill speech, they pass by with dignity.
Early scholars explained this as not attending the festivals and gatherings of falsehood.
Quran, Surah Al-Israa 17:27
إِنَّ ٱلْمُبَذِّرِينَ كَانُوٓا۟ إِخْوَٰنَ ٱلشَّيَٰطِينِ ۖ وَكَانَ ٱلشَّيْطَٰنُ لِرَبِّهِۦ كَفُورًۭا ﴿٢٧﴾
Indeed, the wasteful are brothers of the devils, and ever has Satan been to his Lord ungrateful.
Money burnt on fireworks and lavish parties is waste.
Sunan Abi Dawud 1134
Graded sahih... قد أبدلكم الله بهما خيرا منهما يوم الأضحى ويوم الفطر ...
"Allah has replaced them for you with something better: the day of Adha and the day of Fitr."
Muslims have their own festivals and do not adopt those of others.
Sunan Abi Dawud 4031
Graded hasan sahih... من تشبه بقوم فهو منهم ...
"Whoever imitates a people is one of them."
Copying another community's distinctive celebrations is to be avoided.
Where the ruling is recorded
- al-Bahr al-Ra'iq, Kitab al-Siyar, Bab Ahkam al-Murtaddin. Warns that giving gifts on Nayruz to honour the day endangers faith.
- al-Fatawa al-Hindiyya, Kitab al-Siyar, the chapter on the rulings of apostates, words of kufr about the festivals of non-Muslims. Records the Hanafi rulings on joining and honouring non-Muslim festivals.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.