diff --git a/core/tx_pool.go b/core/tx_pool.go
index b21384458a..388b40058f 100644
--- a/core/tx_pool.go
+++ b/core/tx_pool.go
@@ -618,7 +618,7 @@ func (pool *TxPool) add(tx *types.Transaction, local bool) (bool, error) {
 	// If the transaction pool is full, discard underpriced transactions
 	if uint64(len(pool.all)) >= pool.config.GlobalSlots+pool.config.GlobalQueue {
 		// If the new transaction is underpriced, don't accept it
-		if pool.priced.Underpriced(tx, pool.locals) {
+		if !local && pool.priced.Underpriced(tx, pool.locals) {
 			log.Trace("Discarding underpriced transaction", "hash", hash, "price", tx.GasPrice())
 			underpricedTxCounter.Inc(1)
 			return false, ErrUnderpriced
diff --git a/core/tx_pool_test.go b/core/tx_pool_test.go
index 0cb14cb6a4..f0f86415d4 100644
--- a/core/tx_pool_test.go
+++ b/core/tx_pool_test.go
@@ -1346,7 +1346,7 @@ func TestTransactionPoolUnderpricing(t *testing.T) {
 	defer sub.Unsubscribe()
 
 	// Create a number of test accounts and fund them
-	keys := make([]*ecdsa.PrivateKey, 3)
+	keys := make([]*ecdsa.PrivateKey, 4)
 	for i := 0; i < len(keys); i++ {
 		keys[i], _ = crypto.GenerateKey()
 		pool.currentState.AddBalance(crypto.PubkeyToAddress(keys[i].PublicKey), big.NewInt(1000000))
@@ -1406,18 +1406,22 @@ func TestTransactionPoolUnderpricing(t *testing.T) {
 		t.Fatalf("pool internal state corrupted: %v", err)
 	}
 	// Ensure that adding local transactions can push out even higher priced ones
-	tx := pricedTransaction(1, 100000, big.NewInt(0), keys[2])
-	if err := pool.AddLocal(tx); err != nil {
-		t.Fatalf("failed to add underpriced local transaction: %v", err)
+	ltx = pricedTransaction(1, 100000, big.NewInt(0), keys[2])
+	if err := pool.AddLocal(ltx); err != nil {
+		t.Fatalf("failed to append underpriced local transaction: %v", err)
+	}
+	ltx = pricedTransaction(0, 100000, big.NewInt(0), keys[3])
+	if err := pool.AddLocal(ltx); err != nil {
+		t.Fatalf("failed to add new underpriced local transaction: %v", err)
 	}
 	pending, queued = pool.Stats()
-	if pending != 2 {
-		t.Fatalf("pending transactions mismatched: have %d, want %d", pending, 2)
+	if pending != 3 {
+		t.Fatalf("pending transactions mismatched: have %d, want %d", pending, 3)
 	}
-	if queued != 2 {
-		t.Fatalf("queued transactions mismatched: have %d, want %d", queued, 2)
+	if queued != 1 {
+		t.Fatalf("queued transactions mismatched: have %d, want %d", queued, 1)
 	}
-	if err := validateEvents(events, 1); err != nil {
+	if err := validateEvents(events, 2); err != nil {
 		t.Fatalf("local event firing failed: %v", err)
 	}
 	if err := validateTxPoolInternals(pool); err != nil {