diff --git a/data/appRateLimiter.go b/data/appRateLimiter.go
index 1f4472e68a..9bb2fd1254 100644
--- a/data/appRateLimiter.go
+++ b/data/appRateLimiter.go
@@ -81,8 +81,8 @@ func makeAppRateLimiter(maxCacheSize int, maxAppPeerRate uint64, serviceRateWind
 	serviceRatePerWindow := maxAppPeerRate * uint64(serviceRateWindow/time.Second)
 	maxBucketSize := maxCacheSize / numBuckets
 	if maxBucketSize == 0 {
-		// got the max size less then buckets, use maps of 1
-		maxBucketSize = 1
+		// got the max size less then buckets, use maps of 2 to avoid eviction on each insert
+		maxBucketSize = 2
 	}
 	r := &appRateLimiter{
 		maxBucketSize:        maxBucketSize,
diff --git a/data/appRateLimiter_test.go b/data/appRateLimiter_test.go
index f5e63dfb36..5a7a872133 100644
--- a/data/appRateLimiter_test.go
+++ b/data/appRateLimiter_test.go
@@ -40,7 +40,7 @@ func TestAppRateLimiter_Make(t *testing.T) {
 	window := 1 * time.Second
 	rm := makeAppRateLimiter(10, rate, window)
 
-	require.Equal(t, 1, rm.maxBucketSize)
+	require.Equal(t, 2, rm.maxBucketSize)
 	require.NotEmpty(t, rm.seed)
 	require.NotEmpty(t, rm.salt)
 	for i := 0; i < len(rm.buckets); i++ {
diff --git a/data/txHandler_test.go b/data/txHandler_test.go
index 9237865037..23235f15fd 100644
--- a/data/txHandler_test.go
+++ b/data/txHandler_test.go
@@ -2515,8 +2515,14 @@ func TestTxHandlerAppRateLimiterERLEnabled(t *testing.T) {
 	partitiontest.PartitionTest(t)
 	t.Parallel()
 
+	// technically we don't need any users for this test
+	// but we need to create the genesis accounts to prevent this warning:
+	// "cannot start evaluator: overflowed subtracting rewards for block 1"
+	_, _, genesis := makeTestGenesisAccounts(t, 0)
+	genBal := bookkeeping.MakeGenesisBalances(genesis, sinkAddr, poolAddr)
 	ledgerName := fmt.Sprintf("%s-mem", t.Name())
 	const inMem = true
+
 	log := logging.TestingLog(t)
 	log.SetLevel(logging.Panic)
 
@@ -2525,11 +2531,9 @@ func TestTxHandlerAppRateLimiterERLEnabled(t *testing.T) {
 	cfg.TxBacklogServiceRateWindowSeconds = 1
 	cfg.TxBacklogAppTxPerSecondRate = 3
 	cfg.TxBacklogSize = 3
-	ledger, err := LoadLedger(log, ledgerName, inMem, protocol.ConsensusCurrentVersion, bookkeeping.GenesisBalances{}, genesisID, genesisHash, cfg)
+	l, err := LoadLedger(log, ledgerName, inMem, protocol.ConsensusCurrentVersion, genBal, genesisID, genesisHash, cfg)
 	require.NoError(t, err)
-	defer ledger.Close()
-
-	l := ledger
+	defer l.Close()
 
 	func() {
 		cfg.EnableTxBacklogRateLimiting = false
@@ -2618,9 +2622,10 @@ func TestTxHandlerAppRateLimiterERLEnabled(t *testing.T) {
 	require.Equal(t, 1, handler.appLimiter.len())
 }
 
+// TestTxHandlerAppRateLimiter submits few app txns to make the app rate limit to filter one the last txn
+// to ensure it is propely integrated with the txHandler
 func TestTxHandlerAppRateLimiter(t *testing.T) {
 	partitiontest.PartitionTest(t)
-	t.Parallel()
 
 	const numUsers = 10
 	log := logging.TestingLog(t)
@@ -2637,16 +2642,16 @@ func TestTxHandlerAppRateLimiter(t *testing.T) {
 	cfg.TxBacklogAppTxRateLimiterMaxSize = 100
 	cfg.TxBacklogServiceRateWindowSeconds = 1
 	cfg.TxBacklogAppTxPerSecondRate = 3
-	ledger, err := LoadLedger(log, ledgerName, inMem, protocol.ConsensusCurrentVersion, genBal, genesisID, genesisHash, cfg)
+	l, err := LoadLedger(log, ledgerName, inMem, protocol.ConsensusCurrentVersion, genBal, genesisID, genesisHash, cfg)
 	require.NoError(t, err)
-	defer ledger.Close()
+	defer l.Close()
 
-	l := ledger
 	handler, err := makeTestTxHandler(l, cfg)
 	require.NoError(t, err)
 	defer handler.txVerificationPool.Shutdown()
 	defer close(handler.streamVerifierDropped)
 
+	handler.appLimiterBacklogThreshold = -1 // force the rate limiter to start checking transactions
 	tx := transactions.Transaction{
 		Type: protocol.ApplicationCallTx,
 		Header: transactions.Header{
@@ -2667,21 +2672,21 @@ func TestTxHandlerAppRateLimiter(t *testing.T) {
 	require.Equal(t, network.OutgoingMessage{Action: network.Ignore}, action)
 	require.Equal(t, 1, len(handler.backlogQueue))
 
+	counterBefore := transactionMessagesAppLimiterDrop.GetUint64Value()
 	// trigger the rate limiter and ensure the txn is ignored
-	tx2 := tx
-	for i := 0; i < cfg.TxBacklogAppTxPerSecondRate*cfg.TxBacklogServiceRateWindowSeconds; i++ {
-		tx2.ForeignApps = append(tx2.ForeignApps, 1)
+	numTxnToTriggerARL := cfg.TxBacklogAppTxPerSecondRate * cfg.TxBacklogServiceRateWindowSeconds
+	for i := 0; i < numTxnToTriggerARL; i++ {
+		tx2 := tx
+		tx2.Header.Sender = addresses[i+1]
+		signedTx2 := tx2.Sign(secrets[i+1])
+		blob2 := protocol.Encode(&signedTx2)
+
+		action = handler.processIncomingTxn(network.IncomingMessage{Data: blob2, Sender: mockSender{}})
+		require.Equal(t, network.OutgoingMessage{Action: network.Ignore}, action)
 	}
-	signedTx2 := tx.Sign(secrets[1])
-	blob2 := protocol.Encode(&signedTx2)
-
-	action = handler.processIncomingTxn(network.IncomingMessage{Data: blob2, Sender: mockSender{}})
-	require.Equal(t, network.OutgoingMessage{Action: network.Ignore}, action)
-	require.Equal(t, 1, len(handler.backlogQueue))
-
-	// backlogQueue has the first txn, but the second one is dropped
-	msg := <-handler.backlogQueue
-	require.Equal(t, msg.rawmsg.Data, blob, blob)
+	// last txn should be dropped
+	require.Equal(t, 1+numTxnToTriggerARL-1, len(handler.backlogQueue))
+	require.Equal(t, counterBefore+1, transactionMessagesAppLimiterDrop.GetUint64Value())
 }
 
 // TestTxHandlerCapGuard checks there is no cap guard leak in case of invalid input.