diff --git a/sbt-bridge/test/xsbt/ProductsSpecification.scala b/sbt-bridge/test/xsbt/ProductsSpecification.scala
index b13defecc4cc..f268818f2d8b 100644
--- a/sbt-bridge/test/xsbt/ProductsSpecification.scala
+++ b/sbt-bridge/test/xsbt/ProductsSpecification.scala
@@ -23,12 +23,39 @@ class ProductsSpecification {
     val output = compiler.compileSrcsToJar(src)
     val srcFile = output.srcFiles.head
     val products = output.analysis.productClassesToSources.filter(_._2 == srcFile).keys.toSet
-    
+
     def toPathInJar(className: String): Path =
       Paths.get(s"${output.classesOutput}!${className.replace('.', File.separatorChar)}.class")
     val expected = Set("example.A", "example.A$B", "example.A$C$1").map(toPathInJar)
     assertEquals(products, expected)
   }
 
+  @Test
+  def extractNonLocalClassesNoInc = {
+    val src =
+      """package example
+        |
+        |class A {
+        |  class B
+        |  def foo =
+        |    class C
+        |}""".stripMargin
+    val output = compiler.compileSrcsNoInc(src)
+    val srcFile = output.srcFiles.head
+    val (srcNames, binaryNames) = output.analysis.classNames(srcFile).unzip // non local class names
+
+    assertFalse(output.analysis.enabled()) // inc phases are disabled
+    assertTrue(output.analysis.apis.isEmpty) // extract-api did not run
+    assertTrue(output.analysis.usedNamesAndScopes.isEmpty) // extract-dependencies did not run
+
+    // note that local class C is not included, classNames only records non local classes
+    val expectedBinary = Set("example.A", "example.A$B")
+    assertEquals(expectedBinary, binaryNames.toSet)
+
+    // note that local class C is not included, classNames only records non local classes
+    val expectedSrc = Set("example.A", "example.A.B")
+    assertEquals(expectedSrc, srcNames.toSet)
+  }
+
   private def compiler = new ScalaCompilerForUnitTesting
-}
\ No newline at end of file
+}
diff --git a/sbt-bridge/test/xsbt/ScalaCompilerForUnitTesting.scala b/sbt-bridge/test/xsbt/ScalaCompilerForUnitTesting.scala
index fd125f25560b..400bcd369e27 100644
--- a/sbt-bridge/test/xsbt/ScalaCompilerForUnitTesting.scala
+++ b/sbt-bridge/test/xsbt/ScalaCompilerForUnitTesting.scala
@@ -135,11 +135,15 @@ class ScalaCompilerForUnitTesting {
    * The sequence of temporary files corresponding to passed snippets and analysis
    * callback is returned as a result.
    */
-  def compileSrcs(groupedSrcs: List[List[String]], sourcePath: List[String] = Nil, compileToJar: Boolean = false): CompileOutput = {
+  def compileSrcs(groupedSrcs: List[List[String]], sourcePath: List[String] = Nil, compileToJar: Boolean = false, incEnabled: Boolean = true): CompileOutput = {
       val temp = IO.createTemporaryDirectory
-      val analysisCallback = new TestCallback
+      val (forceSbtArgs, analysisCallback) =
+        if (incEnabled)
+          (Seq("-Yforce-sbt-phases"), new TestCallback)
+        else
+          (Seq.empty, new TestCallbackNoInc)
       val testProgress = new TestCompileProgress
-      val classesOutput = 
+      val classesOutput =
         if (compileToJar) {
           val jar = new File(temp, "classes.jar")
           jar.createNewFile()
@@ -174,7 +178,7 @@ class ScalaCompilerForUnitTesting {
         bridge.run(
           virtualSrcFiles,
           new TestDependencyChanges,
-          Array("-Yforce-sbt-phases", "-classpath", classesOutputPath, "-usejavacp", "-d", classesOutputPath) ++ maybeSourcePath,
+          (forceSbtArgs ++: Array("-classpath", classesOutputPath, "-usejavacp", "-d", classesOutputPath)) ++ maybeSourcePath,
           output,
           analysisCallback,
           new TestReporter,
@@ -193,6 +197,10 @@ class ScalaCompilerForUnitTesting {
     compileSrcs(List(srcs.toList))
   }
 
+  def compileSrcsNoInc(srcs: String*): CompileOutput = {
+    compileSrcs(List(srcs.toList), incEnabled = false)
+  }
+
   def compileSrcsToJar(srcs: String*): CompileOutput =
     compileSrcs(List(srcs.toList), compileToJar = true)
 
@@ -202,4 +210,3 @@ class ScalaCompilerForUnitTesting {
     new TestVirtualFile(srcFile.toPath)
   }
 }
-
diff --git a/sbt-bridge/test/xsbti/TestCallback.scala b/sbt-bridge/test/xsbti/TestCallback.scala
index 3398590b169a..9f6df75d84f0 100644
--- a/sbt-bridge/test/xsbti/TestCallback.scala
+++ b/sbt-bridge/test/xsbti/TestCallback.scala
@@ -11,6 +11,10 @@ import DependencyContext._
 import java.{util => ju}
 import ju.Optional
 
+class TestCallbackNoInc extends TestCallback {
+  override def enabled(): Boolean = false
+}
+
 class TestCallback extends AnalysisCallback2 {
   case class TestUsedName(name: String, scopes: ju.EnumSet[UseScope])