Allah says in the Quran addressing how Muslims should deal with non-Muslims:
“Allah does not forbid you from those who do not fight you because of religion and do not expel you from your homes – from being righteous toward them and acting justly toward them. Indeed, Allah loves those who act justly. Allah only forbids you from those who fight you because of religion and expel you from your homes and aid in your expulsion – [forbids] that you make allies of them. And whoever makes allies of them, then it is those who are the wrongdoers.”2
There are also many places in the Quran and Sunna that encourage the Muslim to be of the best of manners. One example of this is the ḥadīth of the Prophet (pbuh) where he said, “The believers with the most complete faith are the ones with the best manners.”3 The Prophet also said, “Verily, I was sent to perfect good character.”4
That being said there are a couple of things to take into consideration here. The first is that there is no disagreement between the scholars regarding the impermissibility of celebrating Christmas. It is a religious holiday that is based on beliefs that are against Islam and it is not permissible for Muslims to celebrate it. This is because it goes against the concept of protecting one’s dīn and contradicts the teachings of the Prophet (pbuh) which limited Muslim religious holidays to the two Eids. That does not mean that they cannot spend time with their non-Muslim family on such a day if there is a family get together but that is a different issue.
As to whether or not one can greet their non-Muslim family and friends with “Merry Christmas” there are two major opinions. The first says that it is impermissible and was held by scholars such as Ibn al-Qayyim, Ibn Taymiyya, Ibn ʿUthaymīn, and others. The second opinion is that it is permissible as long as the intention is to interact with them in the best way possible without supporting their belief.5 This opinion was held by scholars like Yusuf al-Qaraḍāwī and Muṣṭafā Zarqā. The latter opinion also allows the exchanging of greeting cards on holidays like Christmas as long as the card is free from any sort of religious symbolism.
Al-Qaradawi in his fatwā specifically mentions being aware of the opinion of Ibn Taymiyya, but that he does not agree with it based on the influence of the different times and circumstances during Ibn Taymiyya’s era. Al-Qaradawi speculated that had Ibn Taymiyya lived during the times in which we live and seen the the importance of good relationships between Muslims and non-Muslims, that he would have changed his opinion. Regardless whether that would be the case or not, it does show that al-Qaradawi was acutely aware of Ibn Taymiyya’s opinion when he gave his fatwā.
The argument against saying “Merry Christmas” to one’s family, friends, neighbors, or co-workers is based on the concept that in doing so you are approving of their beliefs in some way. This is simply not the case and saying “Merry Christmas” is nothing more than an act of good societal manners. However, it should be noted that this is not the same as actually celebrating Christmas or other non-Muslim religious holidays. Celebrating these holidays is not allowed but exchanging greetings and even gifts with non-Muslims on them out of companionship and manners is permissible, as long as the gifts themselves are permissible. This is especially the case when those same friends and family greet and exchange gifts with you on the Muslim holidays.
In conclusion, in America we need to try and seek a balance between maintaining our identity and the purity of our beliefs while at the same time dealing with our greater society in the best way possible. Therefore, I think the way Muslims in America should deal with this issue depends on their circumstances. An interesting way to understand this predicament is to look at how Jews in America deal with this same question.6 It seems that they have many of the same discussions that we have around this time of year. In general there are a couple of things that we want to try and be aware of at the same time: we want to maintain our identity and belief, we want people to understand Islam as much as possible, we want to respect and appreciate others, we want to treat others in the best way possible, we don’t want to be socially awkward or insular. Different situations will require different responses. Those of us who have non-Muslim families have different situations than those of us who do not. You could reply with a number of different answers, including: “Merry Christmas”, “Happy Holidays”, “As a Muslim I don’t celebrate Christmas”, or “Thank you. I don’t celebrate Christmas. But merry Christmas to you.” The appropriate answer will depend on the person, the situation, one’s internal intentions, and the perceived intentions of the one they are speaking to.
and Allah knows best.