diff --git a/karma.conf.js b/karma.conf.js
index 4440c37d15..f4989c2d84 100644
--- a/karma.conf.js
+++ b/karma.conf.js
@@ -54,10 +54,10 @@ module.exports = (config) => {
             coverageIstanbulReporter: {
                 thresholds: {
                     global: {
-                        statements: 97,
-                        branches: 93,
-                        functions: 97,
-                        lines: 97,
+                        statements: 98,
+                        branches: 94,
+                        functions: 98,
+                        lines: 98,
                     },
                 },
             },
diff --git a/packages/overlay/src/active-overlay.css b/packages/overlay/src/active-overlay.css
index 4208a615de..263db508d3 100644
--- a/packages/overlay/src/active-overlay.css
+++ b/packages/overlay/src/active-overlay.css
@@ -49,8 +49,11 @@ sp-theme,
 #contents {
     display: inline-block;
     pointer-events: none;
-    animation-duration: var(--spectrum-global-animation-duration-200);
-    animation-timing-function: var(--spectrum-global-animation-ease-out);
+    animation-duration: var(--spectrum-global-animation-duration-200, 160ms);
+    animation-timing-function: var(
+        --spectrum-global-animation-ease-out,
+        ease-out
+    );
     opacity: 1;
     visibility: visible;
 }
diff --git a/packages/overlay/src/overlay-stack.ts b/packages/overlay/src/overlay-stack.ts
index e2c9f4b541..299a0e23e0 100644
--- a/packages/overlay/src/overlay-stack.ts
+++ b/packages/overlay/src/overlay-stack.ts
@@ -40,6 +40,7 @@ export class OverlayStack {
     private overlayHolder!: HTMLElement;
 
     private initTabTrapping(): void {
+        /* istanbul ignore if */
         if (this.document.body.shadowRoot) {
             this.canTabTrap = false;
             return;
@@ -87,6 +88,7 @@ export class OverlayStack {
     }
 
     private startTabTrapping(): void {
+        /* istanbul ignore if */
         if (!this.canTabTrap) {
             return;
         }
@@ -95,6 +97,7 @@ export class OverlayStack {
     }
 
     private stopTabTrapping(): void {
+        /* istanbul ignore if */
         if (!this.canTabTrap) {
             return;
         }
diff --git a/packages/overlay/test/overlay-trigger.test.ts b/packages/overlay/test/overlay-trigger.test.ts
index 12c3981de5..88c2932d03 100644
--- a/packages/overlay/test/overlay-trigger.test.ts
+++ b/packages/overlay/test/overlay-trigger.test.ts
@@ -601,6 +601,7 @@ describe('Overlay Trigger', () => {
         const mouseEnter = new MouseEvent('mouseenter');
         const mouseLeave = new MouseEvent('mouseleave');
         triggerShadowDiv.dispatchEvent(mouseEnter);
+        await nextFrame();
         triggerShadowDiv.dispatchEvent(mouseLeave);
 
         await waitUntil(
diff --git a/packages/overlay/test/overlay.test.ts b/packages/overlay/test/overlay.test.ts
index 2167b57a58..5bda58a280 100644
--- a/packages/overlay/test/overlay.test.ts
+++ b/packages/overlay/test/overlay.test.ts
@@ -24,6 +24,17 @@ import {
     waitUntil,
 } from '@open-wc/testing';
 
+const keyboardEvent = (code: string, shiftKey = false): KeyboardEvent =>
+    new KeyboardEvent('keydown', {
+        bubbles: true,
+        composed: true,
+        cancelable: true,
+        code,
+        shiftKey,
+    });
+const tabEvent = keyboardEvent('Tab');
+const shiftTabEvent = keyboardEvent('Tab', true);
+
 describe('Overlays', () => {
     let testDiv!: HTMLDivElement;
     let openOverlays: (() => void)[] = [];
@@ -124,11 +135,13 @@ describe('Overlays', () => {
 
             expect(button).to.exist;
 
-            Overlay.open(button, 'click', outerPopover, {
-                delayed: false,
-                placement,
-                offset: 10,
-            });
+            openOverlays.push(
+                await Overlay.open(button, 'click', outerPopover, {
+                    delayed: false,
+                    placement,
+                    offset: 10,
+                })
+            );
 
             // Wait for the DOM node to be stolen and reparented into the overlay
             await waitForPredicate(
@@ -198,10 +211,12 @@ describe('Overlays', () => {
 
         expect(button).to.exist;
 
-        await Overlay.open(button, 'click', outerPopover, {
-            delayed: true,
-            offset: 10,
-        });
+        openOverlays.push(
+            await Overlay.open(button, 'click', outerPopover, {
+                delayed: true,
+                offset: 10,
+            })
+        );
 
         // Wait for the DOM node to be stolen and reparented into the overlay
         await waitUntil(
@@ -357,11 +372,13 @@ describe('Overlays', () => {
 
         const dialog = el.querySelector('sp-dialog') as Dialog;
 
-        Overlay.open(el, 'click', dialog, {
-            delayed: false,
-            placement: 'bottom',
-            offset: 10,
-        });
+        openOverlays.push(
+            await Overlay.open(el, 'click', dialog, {
+                delayed: false,
+                placement: 'bottom',
+                offset: 10,
+            })
+        );
 
         await waitUntil(
             () =>
@@ -379,4 +396,92 @@ describe('Overlays', () => {
             'content is returned'
         );
     });
+
+    it('closes an inline overlay when tabbing past the content', async () => {
+        const el = await fixture<HTMLDivElement>(html`
+            <div>
+                <button class="trigger">Trigger</button>
+                <div class="content">
+                    <input />
+                </div>
+            </div>
+        `);
+
+        const trigger = el.querySelector('.trigger') as HTMLElement;
+        const content = el.querySelector('.content') as HTMLElement;
+
+        openOverlays.push(await Overlay.open(trigger, 'inline', content, {}));
+
+        await waitUntil(
+            () => !!el.querySelector('span[tabindex="-1"]'),
+            'returnFocusElement available'
+        );
+
+        const overlays = document.querySelectorAll('active-overlay');
+        const overlay = overlays[0];
+
+        expect(overlay).to.not.be.undefined;
+
+        trigger.dispatchEvent(tabEvent);
+
+        await waitUntil(
+            () => !!el.querySelector('span[tabindex="-1"]'),
+            'returnFocusElement persists on forward tab'
+        );
+
+        content.dispatchEvent(shiftTabEvent);
+
+        expect(document.activeElement === overlay.returnFocusElement).to.be
+            .true;
+
+        content.dispatchEvent(tabEvent);
+
+        await waitUntil(
+            () => el.querySelector('span[tabindex="-1"]') === null,
+            'returnFocusElement no longer available'
+        );
+    });
+
+    it('closes an inline overlay when tabbing before the trigger', async () => {
+        const el = await fixture<HTMLDivElement>(html`
+            <div>
+                <button class="trigger">Trigger</button>
+                <div class="content">
+                    <label>
+                        Content in an inline overlay.
+                        <input />
+                    </label>
+                </div>
+            </div>
+        `);
+
+        const trigger = el.querySelector('.trigger') as HTMLElement;
+        const content = el.querySelector('.content') as HTMLElement;
+
+        openOverlays.push(await Overlay.open(trigger, 'inline', content, {}));
+
+        await waitUntil(
+            () => !!el.querySelector('span[tabindex="-1"]'),
+            'returnFocusElement available'
+        );
+
+        const overlays = document.querySelectorAll('active-overlay');
+        const overlay = overlays[0];
+
+        await elementUpdated(overlay);
+
+        trigger.dispatchEvent(tabEvent);
+
+        await waitUntil(
+            () => !!el.querySelector('span[tabindex="-1"]'),
+            'returnFocusElement persists on forward tab'
+        );
+
+        trigger.dispatchEvent(shiftTabEvent);
+
+        await waitUntil(
+            () => el.querySelector('span[tabindex="-1"]') === null,
+            'returnFocusElement no longer available'
+        );
+    });
 });