diff --git a/packages/loot-core/src/server/budget/actions.ts b/packages/loot-core/src/server/budget/actions.ts
index e0bfbf05c14..ebd1b0bf76f 100644
--- a/packages/loot-core/src/server/budget/actions.ts
+++ b/packages/loot-core/src/server/budget/actions.ts
@@ -1,4 +1,5 @@
 // @ts-strict-ignore
+
 import * as monthUtils from '../../shared/months';
 import { integerToCurrency, safeNumber } from '../../shared/util';
 import * as db from '../db';
@@ -13,6 +14,14 @@ export async function getSheetValue(
   return safeNumber(typeof node.value === 'number' ? node.value : 0);
 }
 
+export async function getSheetBoolean(
+  sheetName: string,
+  cell: string,
+): Promise<boolean> {
+  const node = await sheet.getCell(sheetName, cell);
+  return typeof node.value === 'boolean' ? node.value : false;
+}
+
 // We want to only allow the positive movement of money back and
 // forth. buffered should never be allowed to go into the negative,
 // and you shouldn't be allowed to pull non-existent money from
diff --git a/packages/loot-core/src/server/budget/categoryTemplate.ts b/packages/loot-core/src/server/budget/categoryTemplate.ts
index a930fc601ff..0f1e3787330 100644
--- a/packages/loot-core/src/server/budget/categoryTemplate.ts
+++ b/packages/loot-core/src/server/budget/categoryTemplate.ts
@@ -4,7 +4,7 @@ import * as monthUtils from '../../shared/months';
 import { amountToInteger } from '../../shared/util';
 import * as db from '../db';
 
-import { getSheetValue } from './actions';
+import { getSheetValue, getSheetBoolean } from './actions';
 import { goalsSchedule } from './goalsSchedule';
 import { getActiveSchedules } from './statements';
 import { Template } from './types/templates';
@@ -16,11 +16,10 @@ export class CategoryTemplate {
    *    templates: all templates for this category (including templates and goals)
    *    categoryID: the ID of the category that this Class will be for
    *    month: the month string of the month for templates being applied
-   * 2. gather needed data for external use.  ex: remainder weights, priorities
+   * 2. gather needed data for external use.  ex: remainder weights, priorities, limitExcess
    * 3. run each priority level that is needed via runTemplatesForPriority
-   * 4. run applyLimits to apply any existing limit to the category
-   * 5. run the remainder templates via runRemainder()
-   * 6. finish processing by running getValues() and saving values for batch processing.
+   * 4. run the remainder templates via runRemainder()
+   * 5. finish processing by running getValues() and saving values for batch processing.
    * Alternate:
    * If the situation calls for it you can run all templates in a catagory in one go using the
    * method runAll which will run all templates and goals for reference, and can optionally be saved
@@ -32,10 +31,23 @@ export class CategoryTemplate {
   // set up the class and check all templates
   static async init(templates: Template[], categoryID: string, month) {
     // get all the needed setup values
-    const fromLastMonth = await getSheetValue(
-      monthUtils.sheetForMonth(monthUtils.subMonths(month, 1)),
+    const lastMonthSheet = monthUtils.sheetForMonth(
+      monthUtils.subMonths(month, 1),
+    );
+    const lastMonthBalance = await getSheetValue(
+      lastMonthSheet,
       `leftover-${categoryID}`,
     );
+    const carryover = await getSheetBoolean(
+      lastMonthSheet,
+      `carryover-${categoryID}`,
+    );
+    let fromLastMonth;
+    if (lastMonthBalance < 0 && !carryover) {
+      fromLastMonth = 0;
+    } else {
+      fromLastMonth = lastMonthBalance;
+    }
     // run all checks
     await CategoryTemplate.checkByAndScheduleAndSpend(templates, month);
     await CategoryTemplate.checkPercentage(templates);
@@ -49,6 +61,9 @@ export class CategoryTemplate {
   getRemainderWeight(): number {
     return this.remainderWeight;
   }
+  getLimitExcess(): number {
+    return this.limitExcess;
+  }
 
   // what is the full requested amount this month
   async runAll(available: number) {
@@ -69,6 +84,7 @@ export class CategoryTemplate {
     availStart: number,
   ): Promise<number> {
     if (!this.priorities.includes(priority)) return 0;
+    if (this.limitMet) return 0;
 
     const t = this.templates.filter(t => t.priority === priority);
     let available = budgetAvail || 0;
@@ -137,6 +153,18 @@ export class CategoryTemplate {
       available = available - toBudget;
     }
 
+    //check limit
+    if (this.limitCheck) {
+      if (
+        toBudget + this.toBudgetAmount + this.fromLastMonth >=
+        this.limitAmount
+      ) {
+        const orig = toBudget;
+        toBudget = this.limitAmount - this.toBudgetAmount - this.fromLastMonth;
+        this.limitMet = true;
+        available = available + orig - toBudget;
+      }
+    }
     // don't overbudget when using a priority
     if (priority > 0 && available < 0) {
       this.fullAmount += toBudget;
@@ -149,25 +177,6 @@ export class CategoryTemplate {
     return toBudget;
   }
 
-  applyLimit(): number {
-    if (this.limitCheck === false) {
-      return 0;
-    }
-    if (this.limitHold && this.fromLastMonth >= this.limitAmount) {
-      const orig = this.toBudgetAmount;
-      this.fullAmount = 0;
-      this.toBudgetAmount = 0;
-      return orig;
-    }
-    if (this.toBudgetAmount + this.fromLastMonth > this.limitAmount) {
-      const orig = this.toBudgetAmount;
-      this.toBudgetAmount = this.limitAmount - this.fromLastMonth;
-      this.fullAmount = this.toBudgetAmount;
-      return orig - this.toBudgetAmount;
-    }
-    return 0;
-  }
-
   // run all of the 'remainder' type templates
   runRemainder(budgetAvail: number, perWeight: number) {
     if (this.remainder.length === 0) return 0;
@@ -206,6 +215,8 @@ export class CategoryTemplate {
   private isLongGoal: boolean = null; //defaulting the goals to null so templates can be unset
   private goalAmount: number = null;
   private fromLastMonth = 0; // leftover from last month
+  private limitMet = false;
+  private limitExcess: number = 0;
   private limitAmount = 0;
   private limitCheck = false;
   private limitHold = false;
@@ -344,31 +355,43 @@ export class CategoryTemplate {
       if (!t.limit) continue;
       if (this.limitCheck) {
         throw new Error('Only one `up to` allowed per category');
-      } else if (t.limit) {
-        if (t.limit.period === 'daily') {
-          const numDays = monthUtils.differenceInCalendarDays(
-            monthUtils.addMonths(this.month, 1),
-            this.month,
-          );
-          this.limitAmount += amountToInteger(t.limit.amount) * numDays;
-        } else if (t.limit.period === 'weekly') {
-          const nextMonth = monthUtils.nextMonth(this.month);
-          let week = t.limit.start;
-          const baseLimit = amountToInteger(t.limit.amount);
-          while (week < nextMonth) {
-            if (week >= this.month) {
-              this.limitAmount += baseLimit;
-            }
-            week = monthUtils.addWeeks(week, 1);
+      }
+      if (t.limit.period === 'daily') {
+        const numDays = monthUtils.differenceInCalendarDays(
+          monthUtils.addMonths(this.month, 1),
+          this.month,
+        );
+        this.limitAmount += amountToInteger(t.limit.amount) * numDays;
+      } else if (t.limit.period === 'weekly') {
+        const nextMonth = monthUtils.nextMonth(this.month);
+        let week = t.limit.start;
+        const baseLimit = amountToInteger(t.limit.amount);
+        while (week < nextMonth) {
+          if (week >= this.month) {
+            this.limitAmount += baseLimit;
           }
-        } else if (t.limit.period === 'monthly') {
-          this.limitAmount = amountToInteger(t.limit.amount);
+          week = monthUtils.addWeeks(week, 1);
+        }
+      } else if (t.limit.period === 'monthly') {
+        this.limitAmount = amountToInteger(t.limit.amount);
+      } else {
+        throw new Error('Invalid limit period. Check template syntax');
+      }
+      //amount is good save the rest
+      this.limitCheck = true;
+      this.limitHold = t.limit.hold ? true : false;
+      // check if the limit is already met and save the excess
+      if (this.fromLastMonth >= this.limitAmount) {
+        this.limitMet = true;
+        if (this.limitHold) {
+          this.limitExcess = 0;
+          this.toBudgetAmount = 0;
+          this.fullAmount = 0;
         } else {
-          throw new Error('Invalid limit period. Check template syntax');
+          this.limitExcess = this.fromLastMonth - this.limitAmount;
+          this.toBudgetAmount = -this.limitExcess;
+          this.fullAmount = -this.limitExcess;
         }
-        //amount is good save the rest
-        this.limitCheck = true;
-        this.limitHold = t.limit.hold ? true : false;
       }
     }
   }
diff --git a/packages/loot-core/src/server/budget/goaltemplates.ts b/packages/loot-core/src/server/budget/goaltemplates.ts
index f0509ccbb2a..f10cd35fa80 100644
--- a/packages/loot-core/src/server/budget/goaltemplates.ts
+++ b/packages/loot-core/src/server/budget/goaltemplates.ts
@@ -164,6 +164,7 @@ async function processTemplate(
       try {
         const obj = await CategoryTemplate.init(templates, id, month);
         availBudget += budgeted;
+        availBudget += obj.getLimitExcess();
         const p = obj.getPriorities();
         p.forEach(pr => priorities.push(pr));
         remainderWeight += obj.getRemainderWeight();
@@ -219,10 +220,6 @@ async function processTemplate(
       availBudget -= ret;
     }
   }
-  // run limits
-  catObjects.forEach(o => {
-    availBudget += o.applyLimit();
-  });
   // run remainder
   if (availBudget > 0 && remainderWeight) {
     const perWeight = availBudget / remainderWeight;
diff --git a/upcoming-release-notes/3829.md b/upcoming-release-notes/3829.md
new file mode 100644
index 00000000000..316a9ffb0db
--- /dev/null
+++ b/upcoming-release-notes/3829.md
@@ -0,0 +1,6 @@
+---
+category: Bugfix
+authors: [youngcw]
+---
+
+Fix template limits