diff --git a/docs/en/modtap.md b/docs/en/modtap.md
index edf65a0d4..a2c52a712 100644
--- a/docs/en/modtap.md
+++ b/docs/en/modtap.md
@@ -31,11 +31,14 @@ keyboard.modules.append(modtap)
 ## Custom HoldTap Behavior
 The full ModTap signature is as follows:
 ```python
-KC.MT(KC.TAP, KC.HOLD, prefer_hold=True, tap_interrupted=False, tap_time=None, repeat=HoldTapRepeat.NONE)
+KC.MT(KC.TAP, KC.HOLD, prefer_hold=True, permissive_hold=False, tap_interrupted=False, tap_time=None, repeat=HoldTapRepeat.NONE)
 ```
 * `prefer_hold`: decides which keycode the ModTap key resolves to when another
   key is pressed before the timeout finishes. When `True` the hold keycode is
   chosen, the tap keycode when `False`.
+* `permissive_hold`: decides which keycode the ModTap key resolves to when
+  another key is pressed and released before the timeout finishes. When
+  `True` the hold keycode is chosen, the tap keycode when `False`.
 * `tap_interrupted`: decides if the timeout will interrupt at the first other
   key press/down, or after the first other key up/release. Set to `True` for
   interrupt on release.
diff --git a/kmk/modules/holdtap.py b/kmk/modules/holdtap.py
index 92e61204e..ea3a39f9e 100644
--- a/kmk/modules/holdtap.py
+++ b/kmk/modules/holdtap.py
@@ -36,6 +36,7 @@ def __init__(
         tap,
         hold,
         prefer_hold=True,
+        permissive_hold=False,
         tap_interrupted=False,
         tap_time=None,
         repeat=HoldTapRepeat.NONE,
@@ -43,6 +44,7 @@ def __init__(
         self.tap = tap
         self.hold = hold
         self.prefer_hold = prefer_hold
+        self.permissive_hold = permissive_hold
         self.tap_interrupted = tap_interrupted
         self.tap_time = tap_time
         self.repeat = repeat
@@ -84,8 +86,13 @@ def process_key(self, keyboard, key, is_pressed, int_coord):
                 continue
 
             # holdtap is interrupted by another key event.
-            if (is_pressed and not key.meta.tap_interrupted) or (
-                not is_pressed and key.meta.tap_interrupted and self.key_buffer
+            if (
+                is_pressed
+                and not (key.meta.tap_interrupted or key.meta.permissive_hold)
+            ) or (
+                not is_pressed
+                and (key.meta.tap_interrupted or key.meta.permissive_hold)
+                and self.key_buffer
             ):
 
                 keyboard.cancel_timeout(state.timeout_key)
@@ -98,12 +105,27 @@ def process_key(self, keyboard, key, is_pressed, int_coord):
             # if interrupt on release: store interrupting keys until one of them
             # is released.
             if (
-                key.meta.tap_interrupted
+                (key.meta.tap_interrupted or key.meta.permissive_hold)
                 and is_pressed
                 and not isinstance(current_key.meta, HoldTapKeyMeta)
             ):
                 append_buffer = True
 
+            # if tapping another modtap key during a permissive hold, treat it
+            # as an interruption on release
+            if (
+                key.meta.permissive_hold
+                and not is_pressed
+                and isinstance(current_key.meta, HoldTapKeyMeta)
+                and current_key in self.key_states
+                and self.key_states[current_key].activated == ActivationType.PRESSED
+            ):
+                keyboard.cancel_timeout(state.timeout_key)
+                self.key_states[key].activated = ActivationType.INTERRUPTED
+                self.ht_activate_on_interrupt(
+                    key, keyboard, *state.args, **state.kwargs
+                )
+
         # apply changes with 'side-effects' on key_states or the loop behaviour
         # outside the loop.
         if append_buffer:
@@ -249,7 +271,7 @@ def ht_deactivate_tap(self, key, keyboard, *args, **kwargs):
     def ht_activate_on_interrupt(self, key, keyboard, *args, **kwargs):
         if debug.enabled:
             debug('ht_activate_on_interrupt')
-        if key.meta.prefer_hold:
+        if key.meta.prefer_hold or key.meta.permissive_hold:
             self.ht_activate_hold(key, keyboard, *args, **kwargs)
         else:
             self.ht_activate_tap(key, keyboard, *args, **kwargs)
@@ -257,7 +279,7 @@ def ht_activate_on_interrupt(self, key, keyboard, *args, **kwargs):
     def ht_deactivate_on_interrupt(self, key, keyboard, *args, **kwargs):
         if debug.enabled:
             debug('ht_deactivate_on_interrupt')
-        if key.meta.prefer_hold:
+        if key.meta.prefer_hold or key.meta.permissive_hold:
             self.ht_deactivate_hold(key, keyboard, *args, **kwargs)
         else:
             self.ht_deactivate_tap(key, keyboard, *args, **kwargs)
diff --git a/tests/test_hold_tap.py b/tests/test_hold_tap.py
index da2e9b399..766177074 100644
--- a/tests/test_hold_tap.py
+++ b/tests/test_hold_tap.py
@@ -419,6 +419,76 @@ def test_oneshot(self):
             [{KC.E}, {KC.D, KC.E}, {KC.E}, {KC.C, KC.E}, {KC.E}, {}],
         )
 
+    def test_holdtap_permissive_hold(self):
+        keyboard = KeyboardTest(
+            [ModTap()],
+            [
+                [
+                    KC.MT(
+                        KC.A,
+                        KC.LSHIFT,
+                        tap_time=50,
+                        prefer_hold=False,
+                        permissive_hold=True,
+                    ),
+                    KC.B,
+                    KC.MT(KC.C, KC.LCTL, tap_time=50, prefer_hold=False),
+                ]
+            ],
+            debug_enabled=False,
+        )
+
+        t_within = 40
+        t_after = 60
+
+        keyboard.test(
+            'nested tap',
+            [
+                (0, True),
+                t_within,
+                (1, True),
+                (1, False),
+                (0, False),
+            ],
+            [{KC.LSHIFT}, {KC.LSHIFT, KC.B}, {KC.LSHIFT}, {}],
+        )
+
+        keyboard.test(
+            'standard hold tap',
+            [
+                (0, True),
+                t_after,
+                (1, True),
+                (1, False),
+                (0, False),
+            ],
+            [{KC.LSHIFT}, {KC.LSHIFT, KC.B}, {KC.LSHIFT}, {}],
+        )
+
+        keyboard.test(
+            'key released after mod',
+            [
+                (0, True),
+                t_within,
+                (1, True),
+                (0, False),
+                (1, False),
+            ],
+            [{KC.A}, {KC.B, KC.A}, {KC.B}, {}],
+        )
+
+        keyboard.test(
+            'nested modtap',
+            [
+                (0, True),
+                t_within,
+                (2, True),
+                (2, False),
+                (0, False),
+            ],
+            [{KC.LSHIFT}, {KC.LSHIFT, KC.C}, {KC.LSHIFT}, {}],
+        )
+
 
 if __name__ == '__main__':
     unittest.main()