diff --git a/changelog/69199.fixed.md b/changelog/69199.fixed.md
new file mode 100644
index 000000000000..90e31cbdba3d
--- /dev/null
+++ b/changelog/69199.fixed.md
@@ -0,0 +1 @@
+Fixed Salt-SSH syncing internal modules as extmods
diff --git a/salt/client/ssh/__init__.py b/salt/client/ssh/__init__.py
index 960362ec05a0..9488a88756c9 100644
--- a/salt/client/ssh/__init__.py
+++ b/salt/client/ssh/__init__.py
@@ -1742,6 +1742,10 @@ def mod_data(fsclient):
                 if not os.path.isdir(mod_dir):
                     continue
 
+                # Skip internal salt modules - they should be in the thin/relenv tarball
+                if mod_dir.startswith(str(salt.loader.SALT_BASE_PATH)):
+                    continue
+
                 for fn_ in os.listdir(mod_dir):
                     if fn_.endswith((".py", ".so", ".pyx")) and not fn_.startswith(
                         "__"
diff --git a/tests/pytests/unit/client/ssh/test_extmods.py b/tests/pytests/unit/client/ssh/test_extmods.py
new file mode 100644
index 000000000000..354581196506
--- /dev/null
+++ b/tests/pytests/unit/client/ssh/test_extmods.py
@@ -0,0 +1,17 @@
+import re
+
+import salt.client.ssh
+import salt.fileclient
+from tests.support.mock import MagicMock, patch
+
+
+def test_internal_modules_are_not_synced_as_extmods(master_opts):
+    fsclient = salt.fileclient.FSClient(master_opts)
+    tar = MagicMock()
+    with patch("tarfile.open", return_value=tar):
+        salt.client.ssh.mod_data(fsclient)
+    ptrn = re.compile(
+        r".*/salt/(modules|states|grains|renderers|returners|utils)/\w+\.py$"
+    )
+    for call in tar.add.call_args_list:
+        assert not ptrn.match(call[0][0])