diff --git a/packages/playwright-test/src/dispatcher.ts b/packages/playwright-test/src/dispatcher.ts
index 2730d04bee..734ed1aa52 100644
--- a/packages/playwright-test/src/dispatcher.ts
+++ b/packages/playwright-test/src/dispatcher.ts
@@ -219,7 +219,7 @@ export class Dispatcher {
       }));
       result.status = params.status;
       test.expectedStatus = params.expectedStatus;
-      test._annotateWithInheritence(params.annotations);
+      test.annotations = params.annotations;
       test.timeout = params.timeout;
       const isFailure = result.status !== 'skipped' && result.status !== test.expectedStatus;
       if (isFailure)
diff --git a/packages/playwright-test/src/suiteUtils.ts b/packages/playwright-test/src/suiteUtils.ts
index de1bbcb22e..8b2ee6f925 100644
--- a/packages/playwright-test/src/suiteUtils.ts
+++ b/packages/playwright-test/src/suiteUtils.ts
@@ -55,13 +55,13 @@ export function buildFileSuiteForProject(project: FullProjectInternal, suite: Su
     test.id = testId;
     test.repeatEachIndex = repeatEachIndex;
     test._projectId = project._id;
-    test.retries = project.retries;
+    let inheritedRetries: number | undefined;
     for (let parentSuite: Suite | undefined = suite; parentSuite; parentSuite = parentSuite.parent) {
-      if (parentSuite._retries !== undefined) {
-        test.retries = parentSuite._retries;
-        break;
-      }
+      test._staticAnnotations.push(...parentSuite._staticAnnotations);
+      if (inheritedRetries === undefined && parentSuite._retries !== undefined)
+        inheritedRetries = parentSuite._retries;
     }
+    test.retries = inheritedRetries ?? project.retries;
     // We only compute / set digest in the runner.
     if (test._poolDigest)
       test._workerHash = `${project._id}-${test._poolDigest}-${repeatEachIndex}`;
diff --git a/packages/playwright-test/src/test.ts b/packages/playwright-test/src/test.ts
index 1a5648d20f..c7353885e4 100644
--- a/packages/playwright-test/src/test.ts
+++ b/packages/playwright-test/src/test.ts
@@ -46,7 +46,7 @@ export class Suite extends Base implements reporterTypes.Suite {
   _hooks: { type: 'beforeEach' | 'afterEach' | 'beforeAll' | 'afterAll', fn: Function, location: Location }[] = [];
   _timeout: number | undefined;
   _retries: number | undefined;
-  _annotations: Annotation[] = [];
+  _staticAnnotations: Annotation[] = [];
   _modifiers: Modifier[] = [];
   _parallelMode: 'default' | 'serial' | 'parallel' = 'default';
   _projectConfig: FullProjectInternal | undefined;
@@ -161,7 +161,7 @@ export class Suite extends Base implements reporterTypes.Suite {
       requireFile: this._requireFile,
       timeout: this._timeout,
       retries: this._retries,
-      annotations: this._annotations.slice(),
+      staticAnnotations: this._staticAnnotations.slice(),
       modifiers: this._modifiers.slice(),
       parallelMode: this._parallelMode,
       skipped: this._skipped,
@@ -176,7 +176,7 @@ export class Suite extends Base implements reporterTypes.Suite {
     suite._requireFile = data.requireFile;
     suite._timeout = data.timeout;
     suite._retries = data.retries;
-    suite._annotations = data.annotations;
+    suite._staticAnnotations = data.staticAnnotations;
     suite._modifiers = data.modifiers;
     suite._parallelMode = data.parallelMode;
     suite._skipped = data.skipped;
@@ -216,9 +216,8 @@ export class TestCase extends Base implements reporterTypes.TestCase {
   _poolDigest = '';
   _workerHash = '';
   _projectId = '';
-  // Annotations that are not added from within a test (like fixme and skip), should not
-  // be re-added each time we retry a test.
-  _alreadyInheritedAnnotations: boolean = false;
+  // Annotations known statically before running the test, e.g. `test.skip()` or `test.describe.skip()`.
+  _staticAnnotations: Annotation[] = [];
 
   constructor(title: string, fn: Function, testType: TestTypeImpl, location: Location) {
     super(title);
@@ -258,7 +257,7 @@ export class TestCase extends Base implements reporterTypes.TestCase {
       requireFile: this._requireFile,
       poolDigest: this._poolDigest,
       expectedStatus: this.expectedStatus,
-      annotations: this.annotations.slice(),
+      staticAnnotations: this._staticAnnotations.slice(),
     };
   }
 
@@ -268,7 +267,7 @@ export class TestCase extends Base implements reporterTypes.TestCase {
     test._requireFile = data.requireFile;
     test._poolDigest = data.poolDigest;
     test.expectedStatus = data.expectedStatus;
-    test.annotations = data.annotations;
+    test._staticAnnotations = data.staticAnnotations;
     return test;
   }
 
@@ -280,15 +279,6 @@ export class TestCase extends Base implements reporterTypes.TestCase {
     return test;
   }
 
-  _annotateWithInheritence(annotations: Annotation[]) {
-    if (this._alreadyInheritedAnnotations) {
-      this.annotations = annotations;
-    } else {
-      this._alreadyInheritedAnnotations = true;
-      this.annotations = [...this.annotations, ...annotations];
-    }
-  }
-
   _appendTestResult(): reporterTypes.TestResult {
     const result: reporterTypes.TestResult = {
       retry: this.results.length,
diff --git a/packages/playwright-test/src/testType.ts b/packages/playwright-test/src/testType.ts
index d67e88b309..7f05388453 100644
--- a/packages/playwright-test/src/testType.ts
+++ b/packages/playwright-test/src/testType.ts
@@ -93,7 +93,7 @@ export class TestTypeImpl {
     if (type === 'only')
       test._only = true;
     if (type === 'skip' || type === 'fixme') {
-      test.annotations.push({ type });
+      test._staticAnnotations.push({ type });
       test.expectedStatus = 'skipped';
     }
     for (let parent: Suite | undefined = suite; parent; parent = parent.parent) {
@@ -126,7 +126,7 @@ export class TestTypeImpl {
       child._parallelMode = 'parallel';
     if (type === 'skip' || type === 'fixme') {
       child._skipped = true;
-      child._annotations.push({ type });
+      child._staticAnnotations.push({ type });
     }
 
     for (let parent: Suite | undefined = suite; parent; parent = parent.parent) {
@@ -184,7 +184,7 @@ export class TestTypeImpl {
         if (modifierArgs.length >= 1 && !modifierArgs[0])
           return;
         const description = modifierArgs[1];
-        suite._annotations.push({ type, description });
+        suite._staticAnnotations.push({ type, description });
       }
       return;
     }
diff --git a/packages/playwright-test/src/workerMain.ts b/packages/playwright-test/src/workerMain.ts
index 559c7bed93..f7a5687ebf 100644
--- a/packages/playwright-test/src/workerMain.ts
+++ b/packages/playwright-test/src/workerMain.ts
@@ -287,10 +287,10 @@ export class WorkerMain extends ProcessRunner {
       }
     }
 
-    // Process existing annotations defined on parent suites.
+    for (const annotation of test._staticAnnotations)
+      processAnnotation(annotation);
+    // Process existing annotations dynamically set for parent suites.
     for (const suite of suites) {
-      for (const annotation of suite._annotations)
-        processAnnotation(annotation);
       const extraAnnotations = this._extraSuiteAnnotations.get(suite) || [];
       for (const annotation of extraAnnotations)
         processAnnotation(annotation);