diff --git a/src/zen/drag-and-drop/ZenDragAndDrop.js b/src/zen/drag-and-drop/ZenDragAndDrop.js
index b76972fed..11f1bb10e 100644
--- a/src/zen/drag-and-drop/ZenDragAndDrop.js
+++ b/src/zen/drag-and-drop/ZenDragAndDrop.js
@@ -973,13 +973,15 @@
             (possibleFolderElement.collapsed ||
               possibleFolderElement.childGroupsAndTabs.length < 2)));
       if (
-        isTabGroupLabel(draggedTab) &&
-        draggedTab.group?.isZenFolder &&
-        (isTab(dropElement) || dropElement.hasAttribute("split-view-group")) &&
-        (!dropElement.pinned || dropElement.hasAttribute("zen-essential"))
+        (isTabGroupLabel(draggedTab) &&
+          draggedTab.group?.isZenFolder &&
+          (isTab(dropElement) || dropElement.hasAttribute("split-view-group")) &&
+          (!dropElement.pinned || dropElement.hasAttribute("zen-essential"))) ||
+        showIndicatorUnderNewTabButton
       ) {
+        dropElement = null;
         this.clearDragOverVisuals();
-        return null;
+        return [dropElement, dropBefore];
       }
       if (
         isTab(dropElement) ||
@@ -994,7 +996,7 @@
         let top = 0;
         threshold =
           Services.prefs.getIntPref("browser.tabs.dragDrop.moveOverThresholdPercent") / 100;
-        if (overlapPercent > threshold) {
+        if (overlapPercent > threshold || showIndicatorUnderNewTabButton) {
           top = Math.round(rect.top + rect.height) + "px";
           dropBefore = false;
         } else {
diff --git a/src/zen/tabs/ZenPinnedTabManager.mjs b/src/zen/tabs/ZenPinnedTabManager.mjs
index aca3ba580..ebe9b04b5 100644
--- a/src/zen/tabs/ZenPinnedTabManager.mjs
+++ b/src/zen/tabs/ZenPinnedTabManager.mjs
@@ -565,6 +565,12 @@ class nsZenPinnedTabManager extends nsZenDOMOperatedFeature {
         currentEssenialContainer.essentialsPromo.remove();
       }
 
+      movingTabs = movingTabs.filter((tab) =>
+        gBrowser.isTabGroupLabel(tab)
+          ? tab.group?.isZenFolder && !tabsTarget && !essentialTabsTarget
+          : true
+      );
+
       // TODO: Solve the issue of adding a tab between two groups
       // Remove group labels from the moving tabs and replace it
       // with the sub tabs