diff --git a/src/cascadia/TerminalApp/AppLogic.cpp b/src/cascadia/TerminalApp/AppLogic.cpp
index a9ac10d8fa8..0c8b6e19336 100644
--- a/src/cascadia/TerminalApp/AppLogic.cpp
+++ b/src/cascadia/TerminalApp/AppLogic.cpp
@@ -1129,28 +1129,11 @@ namespace winrt::TerminalApp::implementation
         }
     }
 
-    // Method Description:
-    // - Gets the taskbar state value from the last active control
-    // Return Value:
-    // - The taskbar state of the last active control
-    uint64_t AppLogic::GetLastActiveControlTaskbarState()
-    {
-        if (_root)
-        {
-            return _root->GetLastActiveControlTaskbarState();
-        }
-        return {};
-    }
-
-    // Method Description:
-    // - Gets the taskbar progress value from the last active control
-    // Return Value:
-    // - The taskbar progress of the last active control
-    uint64_t AppLogic::GetLastActiveControlTaskbarProgress()
+    winrt::TerminalApp::TaskbarState AppLogic::TaskbarState()
     {
         if (_root)
         {
-            return _root->GetLastActiveControlTaskbarProgress();
+            return _root->TaskbarState();
         }
         return {};
     }
diff --git a/src/cascadia/TerminalApp/AppLogic.h b/src/cascadia/TerminalApp/AppLogic.h
index 6d2e36d9eb7..4131d28f135 100644
--- a/src/cascadia/TerminalApp/AppLogic.h
+++ b/src/cascadia/TerminalApp/AppLogic.h
@@ -90,8 +90,7 @@ namespace winrt::TerminalApp::implementation
 
         void WindowCloseButtonClicked();
 
-        uint64_t GetLastActiveControlTaskbarState();
-        uint64_t GetLastActiveControlTaskbarProgress();
+        winrt::TerminalApp::TaskbarState TaskbarState();
 
         winrt::Windows::Foundation::IAsyncOperation<winrt::Windows::UI::Xaml::Controls::ContentDialogResult> ShowDialog(winrt::Windows::UI::Xaml::Controls::ContentDialog dialog);
 
diff --git a/src/cascadia/TerminalApp/AppLogic.idl b/src/cascadia/TerminalApp/AppLogic.idl
index bb334d26f47..0b889103899 100644
--- a/src/cascadia/TerminalApp/AppLogic.idl
+++ b/src/cascadia/TerminalApp/AppLogic.idl
@@ -68,8 +68,7 @@ namespace TerminalApp
         void TitlebarClicked();
         void WindowCloseButtonClicked();
 
-        UInt64 GetLastActiveControlTaskbarState();
-        UInt64 GetLastActiveControlTaskbarProgress();
+        TaskbarState TaskbarState{ get; };
 
         FindTargetWindowResult FindTargetWindow(String[] args);
 
diff --git a/src/cascadia/TerminalApp/Pane.cpp b/src/cascadia/TerminalApp/Pane.cpp
index 59dacf6b904..45db24870eb 100644
--- a/src/cascadia/TerminalApp/Pane.cpp
+++ b/src/cascadia/TerminalApp/Pane.cpp
@@ -2548,6 +2548,29 @@ bool Pane::ContainsReadOnly() const
     return _IsLeaf() ? _control.ReadOnly() : (_firstChild->ContainsReadOnly() || _secondChild->ContainsReadOnly());
 }
 
+// Method Description:
+// - If we're a parent, place the taskbar state for all our leaves into the
+//   provided vector.
+// - If we're a leaf, place our own state into the vector.
+// Arguments:
+// - states: a vector that will receive all the states of all leaves in the tree
+// Return Value:
+// - <none>
+void Pane::CollectTaskbarStates(std::vector<winrt::TerminalApp::TaskbarState>& states)
+{
+    if (_IsLeaf())
+    {
+        auto tbState{ winrt::make<winrt::TerminalApp::implementation::TaskbarState>(_control.TaskbarState(),
+                                                                                    _control.TaskbarProgress()) };
+        states.push_back(tbState);
+    }
+    else
+    {
+        _firstChild->CollectTaskbarStates(states);
+        _secondChild->CollectTaskbarStates(states);
+    }
+}
+
 DEFINE_EVENT(Pane, GotFocus, _GotFocusHandlers, winrt::delegate<std::shared_ptr<Pane>>);
 DEFINE_EVENT(Pane, LostFocus, _LostFocusHandlers, winrt::delegate<std::shared_ptr<Pane>>);
 DEFINE_EVENT(Pane, PaneRaiseBell, _PaneRaiseBellHandlers, winrt::Windows::Foundation::EventHandler<bool>);
diff --git a/src/cascadia/TerminalApp/Pane.h b/src/cascadia/TerminalApp/Pane.h
index eed685d322a..34d696340b4 100644
--- a/src/cascadia/TerminalApp/Pane.h
+++ b/src/cascadia/TerminalApp/Pane.h
@@ -21,6 +21,7 @@
 #pragma once
 
 #include "../../cascadia/inc/cppwinrt_utils.h"
+#include "TaskbarState.h"
 
 // fwdecl unittest classes
 namespace TerminalAppLocalTests
@@ -92,6 +93,8 @@ class Pane : public std::enable_shared_from_this<Pane>
 
     bool ContainsReadOnly() const;
 
+    void CollectTaskbarStates(std::vector<winrt::TerminalApp::TaskbarState>& states);
+
     WINRT_CALLBACK(Closed, winrt::Windows::Foundation::EventHandler<winrt::Windows::Foundation::IInspectable>);
     DECLARE_EVENT(GotFocus, _GotFocusHandlers, winrt::delegate<std::shared_ptr<Pane>>);
     DECLARE_EVENT(LostFocus, _LostFocusHandlers, winrt::delegate<std::shared_ptr<Pane>>);
diff --git a/src/cascadia/TerminalApp/TaskbarState.cpp b/src/cascadia/TerminalApp/TaskbarState.cpp
new file mode 100644
index 00000000000..183460556cc
--- /dev/null
+++ b/src/cascadia/TerminalApp/TaskbarState.cpp
@@ -0,0 +1,45 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT license.
+
+#include "pch.h"
+#include "TaskbarState.h"
+#include "TaskbarState.g.cpp"
+
+namespace winrt::TerminalApp::implementation
+{
+    // Default to unset, 0%.
+    TaskbarState::TaskbarState() :
+        TaskbarState(0, 0){};
+
+    TaskbarState::TaskbarState(const uint64_t dispatchTypesState, const uint64_t progressParam) :
+        _State{ dispatchTypesState },
+        _Progress{ progressParam } {}
+
+    uint64_t TaskbarState::Priority() const
+    {
+        // This seemingly nonsensical ordering is from
+        // https://docs.microsoft.com/en-us/windows/win32/api/shobjidl_core/nf-shobjidl_core-itaskbarlist3-setprogressstate#how-the-taskbar-button-chooses-the-progress-indicator-for-a-group
+        switch (_State)
+        {
+        case 0: // Clear = 0,
+            return 5;
+        case 1: // Set = 1,
+            return 3;
+        case 2: // Error = 2,
+            return 1;
+        case 3: // Indeterminate = 3,
+            return 4;
+        case 4: // Paused = 4
+            return 2;
+        }
+        // Here, return 6, to definitely be greater than all the other valid values.
+        // This should never really happen.
+        return 6;
+    }
+
+    int TaskbarState::ComparePriority(const winrt::TerminalApp::TaskbarState& lhs, const winrt::TerminalApp::TaskbarState& rhs)
+    {
+        return lhs.Priority() < rhs.Priority();
+    }
+
+}
diff --git a/src/cascadia/TerminalApp/TaskbarState.h b/src/cascadia/TerminalApp/TaskbarState.h
new file mode 100644
index 00000000000..e36b4440cc9
--- /dev/null
+++ b/src/cascadia/TerminalApp/TaskbarState.h
@@ -0,0 +1,34 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT license.
+
+#pragma once
+#include "inc/cppwinrt_utils.h"
+#include "TaskbarState.g.h"
+
+// fwdecl unittest classes
+namespace TerminalAppLocalTests
+{
+    class TabTests;
+};
+
+namespace winrt::TerminalApp::implementation
+{
+    struct TaskbarState : TaskbarStateT<TaskbarState>
+    {
+    public:
+        TaskbarState();
+        TaskbarState(const uint64_t dispatchTypesState, const uint64_t progress);
+
+        static int ComparePriority(const winrt::TerminalApp::TaskbarState& lhs, const winrt::TerminalApp::TaskbarState& rhs);
+
+        uint64_t Priority() const;
+
+        WINRT_PROPERTY(uint64_t, State, 0);
+        WINRT_PROPERTY(uint64_t, Progress, 0);
+    };
+}
+
+namespace winrt::TerminalApp::factory_implementation
+{
+    BASIC_FACTORY(TaskbarState);
+}
diff --git a/src/cascadia/TerminalApp/TaskbarState.idl b/src/cascadia/TerminalApp/TaskbarState.idl
new file mode 100644
index 00000000000..159242a17b2
--- /dev/null
+++ b/src/cascadia/TerminalApp/TaskbarState.idl
@@ -0,0 +1,15 @@
+// Copyright (c) Microsoft Corporation.
+// Licensed under the MIT license.
+
+namespace TerminalApp
+{
+    [default_interface] runtimeclass TaskbarState
+    {
+        TaskbarState();
+        TaskbarState(UInt64 dispatchTypesState, UInt64 progress);
+
+        UInt64 State{ get; };
+        UInt64 Progress{ get; };
+        UInt64 Priority { get; };
+    }
+}
diff --git a/src/cascadia/TerminalApp/TerminalAppLib.vcxproj b/src/cascadia/TerminalApp/TerminalAppLib.vcxproj
index 25cd7cfa3a0..4d9b5d3dc72 100644
--- a/src/cascadia/TerminalApp/TerminalAppLib.vcxproj
+++ b/src/cascadia/TerminalApp/TerminalAppLib.vcxproj
@@ -90,6 +90,9 @@
       <DependentUpon>TabBase.idl</DependentUpon>
     </ClInclude>
     <ClInclude Include="TabPaletteItem.h" />
+    <ClInclude Include="TaskbarState.h">
+      <DependentUpon>TaskbarState.idl</DependentUpon>
+    </ClInclude>
     <ClInclude Include="TerminalTab.h">
       <DependentUpon>TerminalTab.idl</DependentUpon>
     </ClInclude>
@@ -166,6 +169,9 @@
       <DependentUpon>TabBase.idl</DependentUpon>
     </ClCompile>
     <ClCompile Include="TabPaletteItem.cpp" />
+    <ClCompile Include="TaskbarState.cpp">
+      <DependentUpon>TaskbarState.idl</DependentUpon>
+    </ClCompile>
     <ClCompile Include="TerminalTab.cpp">
       <DependentUpon>TerminalTab.idl</DependentUpon>
     </ClCompile>
@@ -258,6 +264,7 @@
     </Midl>
     <Midl Include="TabBase.idl" />
     <Midl Include="TabPaletteItem.idl" />
+    <Midl Include="TaskbarState.idl" />
     <Midl Include="TerminalTab.idl" />
     <Midl Include="TerminalPage.idl">
       <DependentUpon>TerminalPage.xaml</DependentUpon>
diff --git a/src/cascadia/TerminalApp/TerminalPage.cpp b/src/cascadia/TerminalApp/TerminalPage.cpp
index 3bbf27eaba5..4d49779ade9 100644
--- a/src/cascadia/TerminalApp/TerminalPage.cpp
+++ b/src/cascadia/TerminalApp/TerminalPage.cpp
@@ -2077,29 +2077,35 @@ namespace winrt::TerminalApp::implementation
     }
 
     // Method Description:
-    // - Gets the taskbar state value from the last active control
+    // - Get the combined taskbar state for the page. This is the combination of
+    //   all the states of all the tabs, which are themselves a combination of
+    //   all their panes. Taskbar states are given a priority based on the rules
+    //   in:
+    //   https://docs.microsoft.com/en-us/windows/win32/api/shobjidl_core/nf-shobjidl_core-itaskbarlist3-setprogressstate
+    //   under "How the Taskbar Button Chooses the Progress Indicator for a Group"
+    // Arguments:
+    // - <none>
     // Return Value:
-    // - The taskbar state of the last active control
-    uint64_t TerminalPage::GetLastActiveControlTaskbarState()
+    // - A TaskbarState object representing the combined taskbar state and
+    //   progress percentage of all our tabs.
+    winrt::TerminalApp::TaskbarState TerminalPage::TaskbarState() const
     {
-        if (auto control{ _GetActiveControl() })
-        {
-            return control.TaskbarState();
-        }
-        return {};
-    }
+        auto state{ winrt::make<winrt::TerminalApp::implementation::TaskbarState>() };
 
-    // Method Description:
-    // - Gets the taskbar progress value from the last active control
-    // Return Value:
-    // - The taskbar progress of the last active control
-    uint64_t TerminalPage::GetLastActiveControlTaskbarProgress()
-    {
-        if (auto control{ _GetActiveControl() })
+        for (const auto& tab : _tabs)
         {
-            return control.TaskbarProgress();
+            if (auto tabImpl{ _GetTerminalTabImpl(tab) })
+            {
+                auto tabState{ tabImpl->GetCombinedTaskbarState() };
+                // lowest priority wins
+                if (tabState.Priority() < state.Priority())
+                {
+                    state = tabState;
+                }
+            }
         }
-        return {};
+
+        return state;
     }
 
     // Method Description:
diff --git a/src/cascadia/TerminalApp/TerminalPage.h b/src/cascadia/TerminalApp/TerminalPage.h
index bb1a6f13e9a..6ec7bd7a02b 100644
--- a/src/cascadia/TerminalApp/TerminalPage.h
+++ b/src/cascadia/TerminalApp/TerminalPage.h
@@ -85,8 +85,7 @@ namespace winrt::TerminalApp::implementation
         winrt::TerminalApp::IDialogPresenter DialogPresenter() const;
         void DialogPresenter(winrt::TerminalApp::IDialogPresenter dialogPresenter);
 
-        uint64_t GetLastActiveControlTaskbarState();
-        uint64_t GetLastActiveControlTaskbarProgress();
+        winrt::TerminalApp::TaskbarState TaskbarState() const;
 
         void ShowKeyboardServiceWarning();
         winrt::hstring KeyboardServiceDisabledText();
diff --git a/src/cascadia/TerminalApp/TerminalPage.idl b/src/cascadia/TerminalApp/TerminalPage.idl
index 0d055782268..7d4c580e9f3 100644
--- a/src/cascadia/TerminalApp/TerminalPage.idl
+++ b/src/cascadia/TerminalApp/TerminalPage.idl
@@ -1,5 +1,6 @@
 // Copyright (c) Microsoft Corporation.
 // Licensed under the MIT license.
+import "TaskbarState.idl";
 
 namespace TerminalApp
 {
@@ -42,8 +43,7 @@ namespace TerminalApp
         void ShowKeyboardServiceWarning();
         String KeyboardServiceDisabledText { get; };
 
-        UInt64 GetLastActiveControlTaskbarState();
-        UInt64 GetLastActiveControlTaskbarProgress();
+        TaskbarState TaskbarState{ get; };
 
         event Windows.Foundation.TypedEventHandler<Object, String> TitleChanged;
         event Windows.Foundation.TypedEventHandler<Object, LastTabClosedEventArgs> LastTabClosed;
diff --git a/src/cascadia/TerminalApp/TerminalTab.cpp b/src/cascadia/TerminalApp/TerminalTab.cpp
index ad4595a1b3a..48cf05d3347 100644
--- a/src/cascadia/TerminalApp/TerminalTab.cpp
+++ b/src/cascadia/TerminalApp/TerminalTab.cpp
@@ -177,10 +177,9 @@ namespace winrt::TerminalApp::implementation
             {
                 lastFocusedControl.Focus(_focusState);
 
-                // Update our own progress state, and fire an event signaling
+                // Update our own progress state. This will fire an event signaling
                 // that our taskbar progress changed.
                 _UpdateProgressState();
-                _TaskbarProgressChangedHandlers(lastFocusedControl, nullptr);
             }
             // When we gain focus, remove the bell indicator if it is active
             if (_tabStatus.BellIndicator())
@@ -675,6 +674,26 @@ namespace winrt::TerminalApp::implementation
         });
     }
 
+    // Method Description:
+    // - Get the combined taskbar state for the tab. This is the combination of
+    //   all the states of all our panes. Taskbar states are given a priority
+    //   based on the rules in:
+    //   https://docs.microsoft.com/en-us/windows/win32/api/shobjidl_core/nf-shobjidl_core-itaskbarlist3-setprogressstate
+    //   under "How the Taskbar Button Chooses the Progress Indicator for a
+    //   Group"
+    // Arguments:
+    // - <none>
+    // Return Value:
+    // - A TaskbarState object representing the combined taskbar state and
+    //   progress percentage of all our panes.
+    winrt::TerminalApp::TaskbarState TerminalTab::GetCombinedTaskbarState() const
+    {
+        std::vector<winrt::TerminalApp::TaskbarState> states;
+        _rootPane->CollectTaskbarStates(states);
+        return states.empty() ? winrt::make<winrt::TerminalApp::implementation::TaskbarState>() :
+                                *std::min_element(states.begin(), states.end(), TerminalApp::implementation::TaskbarState::ComparePriority);
+    }
+
     // Method Description:
     // - This should be called on the UI thread. If you don't, then it might
     //   silently do nothing.
@@ -690,37 +709,39 @@ namespace winrt::TerminalApp::implementation
     // - <none>
     void TerminalTab::_UpdateProgressState()
     {
-        if (const auto& activeControl{ GetActiveTerminalControl() })
+        const auto state{ GetCombinedTaskbarState() };
+
+        const auto taskbarState = state.State();
+        // The progress of the control changed, but not necessarily the progress of the tab.
+        // Set the tab's progress ring to the active pane's progress
+        if (taskbarState > 0)
         {
-            const auto taskbarState = activeControl.TaskbarState();
-            // The progress of the control changed, but not necessarily the progress of the tab.
-            // Set the tab's progress ring to the active pane's progress
-            if (taskbarState > 0)
+            if (taskbarState == 3)
             {
-                if (taskbarState == 3)
-                {
-                    // 3 is the indeterminate state, set the progress ring as such
-                    _tabStatus.IsProgressRingIndeterminate(true);
-                }
-                else
-                {
-                    // any non-indeterminate state has a value, set the progress ring as such
-                    _tabStatus.IsProgressRingIndeterminate(false);
-
-                    const auto progressValue = gsl::narrow<uint32_t>(activeControl.TaskbarProgress());
-                    _tabStatus.ProgressValue(progressValue);
-                }
-                // Hide the tab icon (the progress ring is placed over it)
-                HideIcon(true);
-                _tabStatus.IsProgressRingActive(true);
+                // 3 is the indeterminate state, set the progress ring as such
+                _tabStatus.IsProgressRingIndeterminate(true);
             }
             else
             {
-                // Show the tab icon
-                HideIcon(false);
-                _tabStatus.IsProgressRingActive(false);
+                // any non-indeterminate state has a value, set the progress ring as such
+                _tabStatus.IsProgressRingIndeterminate(false);
+
+                const auto progressValue = gsl::narrow<uint32_t>(state.Progress());
+                _tabStatus.ProgressValue(progressValue);
             }
+            // Hide the tab icon (the progress ring is placed over it)
+            HideIcon(true);
+            _tabStatus.IsProgressRingActive(true);
         }
+        else
+        {
+            // Show the tab icon
+            HideIcon(false);
+            _tabStatus.IsProgressRingActive(false);
+        }
+
+        // fire an event signaling that our taskbar progress changed.
+        _TaskbarProgressChangedHandlers(nullptr, nullptr);
     }
 
     // Method Description:
diff --git a/src/cascadia/TerminalApp/TerminalTab.h b/src/cascadia/TerminalApp/TerminalTab.h
index f3cee75559a..6a9c7808c2c 100644
--- a/src/cascadia/TerminalApp/TerminalTab.h
+++ b/src/cascadia/TerminalApp/TerminalTab.h
@@ -83,6 +83,7 @@ namespace winrt::TerminalApp::implementation
 
         void TogglePaneReadOnly();
         std::shared_ptr<Pane> GetActivePane() const;
+        winrt::TerminalApp::TaskbarState GetCombinedTaskbarState() const;
 
         winrt::TerminalApp::TerminalTabStatus TabStatus()
         {
diff --git a/src/cascadia/WindowsTerminal/AppHost.cpp b/src/cascadia/WindowsTerminal/AppHost.cpp
index 092fe8eaeab..5a9735f2992 100644
--- a/src/cascadia/WindowsTerminal/AppHost.cpp
+++ b/src/cascadia/WindowsTerminal/AppHost.cpp
@@ -126,13 +126,14 @@ bool AppHost::OnDirectKeyEvent(const uint32_t vkey, const uint8_t scanCode, cons
 // Arguments:
 // - sender: not used
 // - args: not used
-void AppHost::SetTaskbarProgress(const winrt::Windows::Foundation::IInspectable& /*sender*/, const winrt::Windows::Foundation::IInspectable& /*args*/)
+void AppHost::SetTaskbarProgress(const winrt::Windows::Foundation::IInspectable& /*sender*/,
+                                 const winrt::Windows::Foundation::IInspectable& /*args*/)
 {
     if (_logic)
     {
-        const auto state = gsl::narrow_cast<size_t>(_logic.GetLastActiveControlTaskbarState());
-        const auto progress = gsl::narrow_cast<size_t>(_logic.GetLastActiveControlTaskbarProgress());
-        _window->SetTaskbarProgress(state, progress);
+        const auto state = _logic.TaskbarState();
+        _window->SetTaskbarProgress(gsl::narrow_cast<size_t>(state.State()),
+                                    gsl::narrow_cast<size_t>(state.Progress()));
     }
 }
 
diff --git a/src/cascadia/WindowsTerminal/IslandWindow.cpp b/src/cascadia/WindowsTerminal/IslandWindow.cpp
index 50fd2d156d6..57652788419 100644
--- a/src/cascadia/WindowsTerminal/IslandWindow.cpp
+++ b/src/cascadia/WindowsTerminal/IslandWindow.cpp
@@ -757,7 +757,12 @@ void IslandWindow::SetTaskbarProgress(const size_t state, const size_t progress)
             _taskbar->SetProgressValue(_window.get(), progress, 100);
             break;
         case 3:
-            // sets the progress indicator to an indeterminate state
+            // sets the progress indicator to an indeterminate state.
+            // FIRST, set the progress to "no progress". That'll clear out any
+            // progress value from the previous state. Otherwise, a transition
+            // from (error,x%) or (warning,x%) to indeterminate will leave the
+            // progress value unchanged, and not show the spinner.
+            _taskbar->SetProgressState(_window.get(), TBPF_NOPROGRESS);
             _taskbar->SetProgressState(_window.get(), TBPF_INDETERMINATE);
             break;
         case 4: