diff --git a/.coveragerc b/.coveragerc
index 2579c96f9cd..40da2c6666d 100644
--- a/.coveragerc
+++ b/.coveragerc
@@ -7,6 +7,11 @@ relative_files = True
 omit =
   setup.py
   .nox/*
+source =
+  pkg
+  salt
+  tests
+  tools
 
 [report]
 # Regexes for lines to exclude from consideration
@@ -32,7 +37,7 @@ ignore_errors = True
 [paths]
 salt =
   salt/
-  artifacts/salt
+  artifacts/salt/lib/python3.*/site-packages/salt
   **/testing/salt/
   **\testing\salt
 tests =
diff --git a/.github/workflows/test-action-macos.yml b/.github/workflows/test-action-macos.yml
index 18f413ca874..eabbcddac51 100644
--- a/.github/workflows/test-action-macos.yml
+++ b/.github/workflows/test-action-macos.yml
@@ -415,6 +415,11 @@ jobs:
         run: |
           nox -e combine-coverage
 
+      - name: Create XML Coverage Reports
+        if: always() && inputs.skip-code-coverage == false && job.status != 'cancelled'
+        run: |
+          nox -e create-xml-coverage-reports
+
       - name: Prepare Test Run Artifacts
         id: download-artifacts-from-vm
         if: always() && job.status != 'cancelled'
diff --git a/.github/workflows/test-action.yml b/.github/workflows/test-action.yml
index 31945d0a8a4..aedb60612a3 100644
--- a/.github/workflows/test-action.yml
+++ b/.github/workflows/test-action.yml
@@ -373,6 +373,11 @@ jobs:
         run: |
           tools --timestamps vm combine-coverage ${{ inputs.distro-slug }}
 
+      - name: Create XML Coverage Reports
+        if: always() && inputs.skip-code-coverage == false && steps.spin-up-vm.outcome == 'success' && job.status != 'cancelled'
+        run: |
+          tools --timestamps vm create-xml-coverage-reports ${{ inputs.distro-slug }}
+
       - name: Download Test Run Artifacts
         id: download-artifacts-from-vm
         if: always() && steps.spin-up-vm.outcome == 'success' && job.status != 'cancelled'
diff --git a/.github/workflows/test-package-downloads-action-linux.yml b/.github/workflows/test-package-downloads-action-linux.yml
index d303aa115df..0d88f596d29 100644
--- a/.github/workflows/test-package-downloads-action-linux.yml
+++ b/.github/workflows/test-package-downloads-action-linux.yml
@@ -258,6 +258,11 @@ jobs:
         run: |
           tools --timestamps vm combine-coverage ${{ inputs.distro-slug }}
 
+      - name: Create XML Coverage Reports
+        if: always() && inputs.skip-code-coverage == false && steps.spin-up-vm.outcome == 'success' && job.status != 'cancelled'
+        run: |
+          tools --timestamps vm create-xml-coverage-reports ${{ inputs.distro-slug }}
+
       - name: Download Test Run Artifacts
         id: download-artifacts-from-vm
         if: always() && steps.spin-up-vm.outcome == 'success'
diff --git a/.github/workflows/test-package-downloads-action-macos.yml b/.github/workflows/test-package-downloads-action-macos.yml
index 126aa89c082..2e362959407 100644
--- a/.github/workflows/test-package-downloads-action-macos.yml
+++ b/.github/workflows/test-package-downloads-action-macos.yml
@@ -242,6 +242,11 @@ jobs:
         run: |
           nox --force-color -e combine-coverage
 
+      - name: Create XML Coverage Reports
+        if: always() && inputs.skip-code-coverage == false && job.status != 'cancelled'
+        run: |
+          tools --timestamps vm create-xml-coverage-reports ${{ inputs.distro-slug }}
+
       - name: Prepare Test Run Artifacts
         id: download-artifacts-from-vm
         if: always() && job.status != 'cancelled'
diff --git a/.github/workflows/test-package-downloads-action-windows.yml b/.github/workflows/test-package-downloads-action-windows.yml
index 2f9e77fb156..2e20ee8455b 100644
--- a/.github/workflows/test-package-downloads-action-windows.yml
+++ b/.github/workflows/test-package-downloads-action-windows.yml
@@ -263,6 +263,11 @@ jobs:
         run: |
           tools --timestamps vm combine-coverage ${{ inputs.distro-slug }}
 
+      - name: Create XML Coverage Reports
+        if: always() && inputs.skip-code-coverage == false && steps.spin-up-vm.outcome == 'success' && job.status != 'cancelled'
+        run: |
+          tools --timestamps vm create-xml-coverage-reports ${{ inputs.distro-slug }}
+
       - name: Download Test Run Artifacts
         id: download-artifacts-from-vm
         if: always() && steps.spin-up-vm.outcome == 'success'
diff --git a/noxfile.py b/noxfile.py
index ca656f3a9ee..5d20d261da6 100644
--- a/noxfile.py
+++ b/noxfile.py
@@ -367,9 +367,10 @@ def _install_coverage_requirement(session):
         )
 
 
-def _run_with_coverage(session, *test_cmd, env=None):
+def _run_with_coverage(session, *test_cmd, env=None, on_rerun=False):
     _install_coverage_requirement(session)
-    session.run("coverage", "erase")
+    if on_rerun is False:
+        session.run("coverage", "erase")
 
     if env is None:
         env = {}
@@ -440,8 +441,8 @@ def _run_with_coverage(session, *test_cmd, env=None):
                 "xml",
                 "-o",
                 str(COVERAGE_OUTPUT_DIR.joinpath("tests.xml").relative_to(REPO_ROOT)),
-                "--omit=salt/*",
-                "--include=tests/*",
+                "--omit=salt/*,artifacts/salt/*",
+                "--include=tests/*,pkg/tests/*",
                 env=coverage_base_env,
             )
             # Generate report for salt code coverage
@@ -450,8 +451,8 @@ def _run_with_coverage(session, *test_cmd, env=None):
                 "xml",
                 "-o",
                 str(COVERAGE_OUTPUT_DIR.joinpath("salt.xml").relative_to(REPO_ROOT)),
-                "--omit=tests/*",
-                "--include=salt/*",
+                "--omit=tests/*,pkg/tests/*",
+                "--include=salt/*,artifacts/salt/*",
                 env=coverage_base_env,
             )
             # Generate html report for tests code coverage
@@ -460,8 +461,8 @@ def _run_with_coverage(session, *test_cmd, env=None):
                 "html",
                 "-d",
                 str(COVERAGE_OUTPUT_DIR.joinpath("html").relative_to(REPO_ROOT)),
-                "--omit=salt/*",
-                "--include=tests/*",
+                "--omit=salt/*,artifacts/salt/*",
+                "--include=tests/*,pkg/tests/*",
                 env=coverage_base_env,
             )
             # Generate html report for salt code coverage
@@ -470,8 +471,8 @@ def _run_with_coverage(session, *test_cmd, env=None):
                 "html",
                 "-d",
                 str(COVERAGE_OUTPUT_DIR.joinpath("html").relative_to(REPO_ROOT)),
-                "--omit=tests/*",
-                "--include=salt/*",
+                "--omit=tests/*,pkg/tests/*",
+                "--include=salt/*,artifacts/salt/*",
                 env=coverage_base_env,
             )
 
@@ -521,8 +522,8 @@ def _report_coverage(session):
             COVERAGE_OUTPUT_DIR.relative_to(REPO_ROOT) / "coverage-salt.json"
         )
         cmd_args = [
-            "--omit=tests/*",
-            "--include=salt/*",
+            "--omit=tests/*,pkg/tests/*",
+            "--include=salt/*,artifacts/salt/*",
         ]
 
     elif report_section == "tests":
@@ -530,15 +531,15 @@ def _report_coverage(session):
             COVERAGE_OUTPUT_DIR.relative_to(REPO_ROOT) / "coverage-tests.json"
         )
         cmd_args = [
-            "--omit=salt/*",
-            "--include=tests/*",
+            "--omit=salt/*,artifacts/salt/*",
+            "--include=tests/*,pkg/tests/*",
         ]
     else:
         json_coverage_file = (
             COVERAGE_OUTPUT_DIR.relative_to(REPO_ROOT) / "coverage.json"
         )
         cmd_args = [
-            "--include=salt/*,tests/*",
+            "--include=salt/*,artifacts/salt/*,tests/*,pkg/tests/*",
         ]
 
     session.run(
@@ -1020,7 +1021,7 @@ def pytest_tornado(session, coverage):
     session.notify(session_name.replace("pytest-", "test-"))
 
 
-def _pytest(session, coverage, cmd_args, env=None):
+def _pytest(session, coverage, cmd_args, env=None, on_rerun=False):
     # Create required artifacts directories
     _create_ci_directories()
 
@@ -1074,6 +1075,7 @@ def _pytest(session, coverage, cmd_args, env=None):
             "pytest",
             *args,
             env=env,
+            on_rerun=on_rerun,
         )
     else:
         session.run("python", "-m", "pytest", *args, env=env)
@@ -1166,7 +1168,13 @@ def _ci_test(session, transport, onedir=False):
             ]
             + chunk_cmd
         )
-        _pytest(session, coverage=track_code_coverage, cmd_args=pytest_args, env=env)
+        _pytest(
+            session,
+            coverage=track_code_coverage,
+            cmd_args=pytest_args,
+            env=env,
+            on_rerun=True,
+        )
 
 
 @nox.session(python=_PYTHON_VERSIONS, name="ci-test")
@@ -1371,12 +1379,50 @@ def create_html_coverage_report(session):
         "html",
         "-d",
         str(COVERAGE_OUTPUT_DIR.joinpath("html").relative_to(REPO_ROOT)),
-        "--include=salt/*,tests/*",
+        "--include=salt/*,artifacts/salt/*,tests/*,pkg/tests/*",
         "--show-contexts",
         env=env,
     )
 
 
+@nox.session(python="3", name="create-xml-coverage-reports")
+def create_xml_coverage_reports(session):
+    _install_coverage_requirement(session)
+    env = {
+        # The full path to the .coverage data file. Makes sure we always write
+        # them to the same directory
+        "COVERAGE_FILE": str(COVERAGE_FILE),
+    }
+
+    # Generate report for tests code coverage
+    try:
+        session.run(
+            "coverage",
+            "xml",
+            "-o",
+            str(COVERAGE_OUTPUT_DIR.joinpath("tests.xml").relative_to(REPO_ROOT)),
+            "--omit=salt/*,artifacts/salt/*",
+            "--include=tests/*,pkg/tests/*",
+            env=env,
+        )
+    except CommandFailed:
+        session_warn(session, "Failed to generate the tests XML code coverage report")
+
+    # Generate report for salt code coverage
+    try:
+        session.run(
+            "coverage",
+            "xml",
+            "-o",
+            str(COVERAGE_OUTPUT_DIR.joinpath("salt.xml").relative_to(REPO_ROOT)),
+            "--omit=tests/*,pkg/tests/*",
+            "--include=salt/*,artifacts/salt/*",
+            env=env,
+        )
+    except CommandFailed:
+        session_warn(session, "Failed to generate the source XML code coverage report")
+
+
 class Tee:
     """
     Python class to mimic linux tee behaviour
diff --git a/tools/vm.py b/tools/vm.py
index 8988fe32f1e..08fcb28b44f 100644
--- a/tools/vm.py
+++ b/tools/vm.py
@@ -547,6 +547,24 @@ def combine_coverage(ctx: Context, name: str):
     ctx.exit(returncode)
 
 
+@vm.command(
+    name="create-xml-coverage-reports",
+    arguments={
+        "name": {
+            "help": "The VM Name",
+            "metavar": "VM_NAME",
+        },
+    },
+)
+def create_xml_coverage_reports(ctx: Context, name: str):
+    """
+    Create XML code coverage reports in the VM.
+    """
+    vm = VM(ctx=ctx, name=name, region_name=ctx.parser.options.region)
+    returncode = vm.create_xml_coverage_reports()
+    ctx.exit(returncode)
+
+
 @vm.command(
     name="download-artifacts",
     arguments={
@@ -1415,6 +1433,12 @@ class VM:
         """
         return self.run_nox("combine-coverage", session_args=[self.name])
 
+    def create_xml_coverage_reports(self):
+        """
+        Create XML coverage reports
+        """
+        return self.run_nox("create-xml-coverage-reports", session_args=[self.name])
+
     def compress_dependencies(self):
         """
         Compress .nox/ into nox.<vm-name>.tar.* in the VM