diff --git a/kitty/graphics.c b/kitty/graphics.c
index 30f10ac99..62c78e02f 100644
--- a/kitty/graphics.c
+++ b/kitty/graphics.c
@@ -983,12 +983,14 @@ grman_update_layers(GraphicsManager *self, unsigned int scrolled_by, float scree
     // Calculate the group counts
     i = 0;
     while (i < self->count) {
-        id_type image_id = self->render_data[i].image_id, start = i;
-        if (start == self->count - 1) i = self->count;
-        else {
-            while (i < self->count - 1 && self->render_data[++i].image_id == image_id) {}
+        id_type num_identical = 1, image_id = self->render_data[i].image_id, start = i;
+        while (++i < self->count) {
+            if (self->render_data[i].image_id != image_id) break;
+            num_identical++;
+        }
+        while (num_identical > 0) {
+            self->render_data[start++].group_count = num_identical--;
         }
-        self->render_data[start].group_count = i - start;
     }
     return true;
 }
diff --git a/kitty_tests/graphics.py b/kitty_tests/graphics.py
index a045c963c..730929913 100644
--- a/kitty_tests/graphics.py
+++ b/kitty_tests/graphics.py
@@ -516,13 +516,30 @@ class TestGraphics(BaseTest):
         rect_eq(l2[0]['dest_rect'], left, top, -1 + (1 + s.columns) * dx, top - dy * 5 / ch)
         rect_eq(l2[1]['src_rect'], 0, 0, 1, 1)
         rect_eq(l2[1]['dest_rect'], -1, 1, -1 + dx, 1 - dy)
-        self.ae(l2[0]['group_count'], 1), self.ae(l2[1]['group_count'], 1)
+        self.ae(l2[0]['group_count'], 2)
+        self.ae(l2[1]['group_count'], 1)
         self.ae(s.cursor.x, 0), self.ae(s.cursor.y, 1)
         self.ae(put_image(s, 10, 20, cursor_movement=1)[1], 'OK')
         self.ae(s.cursor.x, 0), self.ae(s.cursor.y, 1)
         s.reset()
         self.assertEqual(s.grman.disk_cache.total_size, 0)
 
+    def test_image_layer_grouping(self):
+        cw, ch = 10, 20
+        s, dx, dy, put_image, put_ref, layers, rect_eq = put_helpers(self, cw, ch)
+
+        def group_counts():
+            return tuple(x['group_count'] for x in layers(s))
+
+        self.ae(put_image(s, 10, 20, id=1)[1], 'OK')
+        self.ae(group_counts(), (1,))
+        put_ref(s, id=1, num_cols=2, num_lines=1, placement_id=2)
+        put_ref(s, id=1, num_cols=2, num_lines=1, placement_id=3, z=-2)
+        put_ref(s, id=1, num_cols=2, num_lines=1, placement_id=4, z=-2)
+        self.ae(group_counts(), (4, 3, 2, 1))
+        self.ae(put_image(s, 8, 16, id=2, z=-1)[1], 'OK')
+        self.ae(group_counts(), (2, 1, 1, 2, 1))
+
     def test_unicode_placeholders(self):
         # This test tests basic image placement using using unicode placeholders
         cw, ch = 10, 20