diff --git a/configs/mainnet/altair.yaml b/configs/mainnet/altair.yaml
index e387fc87a..a6761b142 100644
--- a/configs/mainnet/altair.yaml
+++ b/configs/mainnet/altair.yaml
@@ -22,6 +22,8 @@ EPOCHS_PER_SYNC_COMMITTEE_PERIOD: 512
 # ---------------------------------------------------------------
 # 2**2 (= 4)
 INACTIVITY_SCORE_BIAS: 4
+# 2**4 (= 16)
+INACTIVITY_SCORE_RECOVERY_RATE: 16
 
 
 # Signature domains
diff --git a/configs/minimal/altair.yaml b/configs/minimal/altair.yaml
index a66b5c7ca..f9b8401e1 100644
--- a/configs/minimal/altair.yaml
+++ b/configs/minimal/altair.yaml
@@ -22,6 +22,8 @@ EPOCHS_PER_SYNC_COMMITTEE_PERIOD: 8
 # ---------------------------------------------------------------
 # 2**2 (= 4)
 INACTIVITY_SCORE_BIAS: 4
+# 2**4 (= 16)
+INACTIVITY_SCORE_RECOVERY_RATE: 16
 
 
 # Signature domains
diff --git a/specs/altair/beacon-chain.md b/specs/altair/beacon-chain.md
index 7bdedada7..35909f23f 100644
--- a/specs/altair/beacon-chain.md
+++ b/specs/altair/beacon-chain.md
@@ -127,6 +127,7 @@ This patch updates a few configuration values to move penalty parameters closer
 | Name | Value |
 | - | - |
 | `INACTIVITY_SCORE_BIAS` | `uint64(4)` |
+| `INACTIVITY_SCORE_RECOVERY_RATE` | `uint64(16)` |
 
 ### Domain types
 
@@ -417,14 +418,13 @@ def get_inactivity_penalty_deltas(state: BeaconState) -> Tuple[Sequence[Gwei], S
     """
     rewards = [Gwei(0) for _ in range(len(state.validators))]
     penalties = [Gwei(0) for _ in range(len(state.validators))]
-    if is_in_inactivity_leak(state):
-        previous_epoch = get_previous_epoch(state)
-        matching_target_indices = get_unslashed_participating_indices(state, TIMELY_TARGET_FLAG_INDEX, previous_epoch)
-        for index in get_eligible_validator_indices(state):
-            if index not in matching_target_indices:
-                penalty_numerator = state.validators[index].effective_balance * state.inactivity_scores[index]
-                penalty_denominator = INACTIVITY_SCORE_BIAS * INACTIVITY_PENALTY_QUOTIENT_ALTAIR
-                penalties[index] += Gwei(penalty_numerator // penalty_denominator)
+    previous_epoch = get_previous_epoch(state)
+    matching_target_indices = get_unslashed_participating_indices(state, TIMELY_TARGET_FLAG_INDEX, previous_epoch)
+    for index in get_eligible_validator_indices(state):
+        if index not in matching_target_indices:
+            penalty_numerator = state.validators[index].effective_balance * state.inactivity_scores[index]
+            penalty_denominator = INACTIVITY_SCORE_BIAS * INACTIVITY_PENALTY_QUOTIENT_ALTAIR
+            penalties[index] += Gwei(penalty_numerator // penalty_denominator)
     return rewards, penalties
 ```
 
@@ -624,12 +624,19 @@ def process_justification_and_finalization(state: BeaconState) -> None:
 
 ```python
 def process_inactivity_updates(state: BeaconState) -> None:
+    # Score updates based on previous epoch participation, skip genesis epoch
+    if get_current_epoch(state) == GENESIS_EPOCH:
+        return
+
     for index in get_eligible_validator_indices(state):
+        # Increase inactivity score of inactive validators
         if index in get_unslashed_participating_indices(state, TIMELY_TARGET_FLAG_INDEX, get_previous_epoch(state)):
-            if state.inactivity_scores[index] > 0:
-                state.inactivity_scores[index] -= 1
-        elif is_in_inactivity_leak(state):
+            state.inactivity_scores[index] -= min(1, state.inactivity_scores[index])
+        else:
             state.inactivity_scores[index] += INACTIVITY_SCORE_BIAS
+        # Decrease the score of all validators for forgiveness when not during a leak
+        if not is_in_inactivity_leak(state):
+            state.inactivity_scores[index] -= min(INACTIVITY_SCORE_RECOVERY_RATE, state.inactivity_scores[index])
 ```
 
 #### Rewards and penalties
diff --git a/tests/core/pyspec/eth2spec/test/altair/epoch_processing/test_process_inactivity_updates.py b/tests/core/pyspec/eth2spec/test/altair/epoch_processing/test_process_inactivity_updates.py
new file mode 100644
index 000000000..1cc8cb9ae
--- /dev/null
+++ b/tests/core/pyspec/eth2spec/test/altair/epoch_processing/test_process_inactivity_updates.py
@@ -0,0 +1,90 @@
+from random import Random
+
+from eth2spec.test.context import spec_state_test, with_altair_and_later
+from eth2spec.test.helpers.inactivity_scores import randomize_inactivity_scores
+from eth2spec.test.helpers.state import (
+    next_epoch_via_block,
+)
+from eth2spec.test.helpers.epoch_processing import (
+    run_epoch_processing_with
+)
+from eth2spec.test.helpers.random import (
+    randomize_attestation_participation,
+)
+
+
+def set_full_participation(spec, state):
+    full_flags = spec.ParticipationFlags(0)
+    for flag_index in range(len(spec.PARTICIPATION_FLAG_WEIGHTS)):
+        full_flags = spec.add_flag(full_flags, flag_index)
+
+    for index in range(len(state.validators)):
+        state.current_epoch_participation[index] = full_flags
+        state.previous_epoch_participation[index] = full_flags
+
+
+def run_process_inactivity_updates(spec, state):
+    yield from run_epoch_processing_with(spec, state, 'process_inactivity_updates')
+
+
+@with_altair_and_later
+@spec_state_test
+def test_genesis(spec, state):
+    yield from run_process_inactivity_updates(spec, state)
+
+
+#
+# Genesis epoch processing is skipped
+# Thus all of following tests all go past genesis epoch to test core functionality
+#
+
+@with_altair_and_later
+@spec_state_test
+def test_all_zero_inactivity_scores_empty_participation(spec, state):
+    next_epoch_via_block(spec, state)
+    state.inactivity_scores = [0] * len(state.validators)
+    yield from run_process_inactivity_updates(spec, state)
+
+
+@with_altair_and_later
+@spec_state_test
+def test_all_zero_inactivity_scores_random_participation(spec, state):
+    next_epoch_via_block(spec, state)
+    state.inactivity_scores = [0] * len(state.validators)
+    randomize_attestation_participation(spec, state, rng=Random(5555))
+    yield from run_process_inactivity_updates(spec, state)
+
+
+@with_altair_and_later
+@spec_state_test
+def test_all_zero_inactivity_scores_full_participation(spec, state):
+    next_epoch_via_block(spec, state)
+    set_full_participation(spec, state)
+    state.inactivity_scores = [0] * len(state.validators)
+    yield from run_process_inactivity_updates(spec, state)
+
+
+@with_altair_and_later
+@spec_state_test
+def test_random_inactivity_scores_empty_participation(spec, state):
+    next_epoch_via_block(spec, state)
+    randomize_inactivity_scores(spec, state, rng=Random(9999))
+    yield from run_process_inactivity_updates(spec, state)
+
+
+@with_altair_and_later
+@spec_state_test
+def test_random_inactivity_scores_random_participation(spec, state):
+    next_epoch_via_block(spec, state)
+    randomize_attestation_participation(spec, state, rng=Random(22222))
+    randomize_inactivity_scores(spec, state, rng=Random(22222))
+    yield from run_process_inactivity_updates(spec, state)
+
+
+@with_altair_and_later
+@spec_state_test
+def test_random_inactivity_scores_full_participation(spec, state):
+    next_epoch_via_block(spec, state)
+    set_full_participation(spec, state)
+    randomize_inactivity_scores(spec, state, rng=Random(33333))
+    yield from run_process_inactivity_updates(spec, state)
diff --git a/tests/core/pyspec/eth2spec/test/altair/rewards/test_inactivity_scores.py b/tests/core/pyspec/eth2spec/test/altair/rewards/test_inactivity_scores.py
new file mode 100644
index 000000000..9eca9a92a
--- /dev/null
+++ b/tests/core/pyspec/eth2spec/test/altair/rewards/test_inactivity_scores.py
@@ -0,0 +1,118 @@
+from random import Random
+
+from eth2spec.test.context import (
+    with_altair_and_later,
+    spec_test,
+    spec_state_test,
+    with_custom_state,
+    single_phase,
+    low_balances, misc_balances,
+)
+from eth2spec.test.helpers.inactivity_scores import randomize_inactivity_scores
+from eth2spec.test.helpers.rewards import leaking
+import eth2spec.test.helpers.rewards as rewards_helpers
+
+
+@with_altair_and_later
+@spec_state_test
+def test_random_inactivity_scores_0(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(9999))
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(9999))
+
+
+@with_altair_and_later
+@spec_state_test
+def test_random_inactivity_scores_1(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(10000))
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(10000))
+
+
+@with_altair_and_later
+@spec_state_test
+def test_half_zero_half_random_inactivity_scores(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(10101))
+    half_val_point = len(state.validators) // 2
+    state.inactivity_scores = [0] * half_val_point + state.inactivity_scores[half_val_point:]
+
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(10101))
+
+
+@with_altair_and_later
+@spec_state_test
+def test_random_high_inactivity_scores(spec, state):
+    randomize_inactivity_scores(spec, state, minimum=500000, maximum=5000000, rng=Random(9998))
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(9998))
+
+
+@with_altair_and_later
+@with_custom_state(balances_fn=low_balances, threshold_fn=lambda spec: spec.EJECTION_BALANCE)
+@spec_test
+@single_phase
+def test_random_inactivity_scores_low_balances_0(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(11111))
+    yield from rewards_helpers.run_test_full_random(spec, state)
+
+
+@with_altair_and_later
+@with_custom_state(balances_fn=low_balances, threshold_fn=lambda spec: spec.EJECTION_BALANCE)
+@spec_test
+@single_phase
+def test_random_inactivity_scores_low_balances_1(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(22222))
+    yield from rewards_helpers.run_test_full_random(spec, state)
+
+
+@with_altair_and_later
+@with_custom_state(balances_fn=misc_balances, threshold_fn=lambda spec: spec.EJECTION_BALANCE)
+@spec_test
+@single_phase
+def test_full_random_misc_balances(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(33333))
+    yield from rewards_helpers.run_test_full_random(spec, state)
+
+
+#
+# Leaking variants
+#
+
+@with_altair_and_later
+@spec_state_test
+@leaking()
+def test_random_inactivity_scores_leaking_0(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(9999))
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(9999))
+
+
+@with_altair_and_later
+@spec_state_test
+@leaking()
+def test_random_inactivity_scores_leaking_1(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(10000))
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(10000))
+
+
+@with_altair_and_later
+@spec_state_test
+@leaking()
+def test_half_zero_half_random_inactivity_scores_leaking(spec, state):
+    randomize_inactivity_scores(spec, state, rng=Random(10101))
+    half_val_point = len(state.validators) // 2
+    state.inactivity_scores = [0] * half_val_point + state.inactivity_scores[half_val_point:]
+
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(10101))
+
+
+@with_altair_and_later
+@spec_state_test
+@leaking()
+def test_random_high_inactivity_scores_leaking(spec, state):
+    randomize_inactivity_scores(spec, state, minimum=500000, maximum=5000000, rng=Random(9998))
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(9998))
+
+
+@with_altair_and_later
+@spec_state_test
+@leaking(epochs=5)
+def test_random_high_inactivity_scores_leaking_5_epochs(spec, state):
+    randomize_inactivity_scores(spec, state, minimum=500000, maximum=5000000, rng=Random(9998))
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(9998))
diff --git a/tests/core/pyspec/eth2spec/test/helpers/epoch_processing.py b/tests/core/pyspec/eth2spec/test/helpers/epoch_processing.py
index 3c47c4895..c783692fc 100644
--- a/tests/core/pyspec/eth2spec/test/helpers/epoch_processing.py
+++ b/tests/core/pyspec/eth2spec/test/helpers/epoch_processing.py
@@ -9,6 +9,7 @@ def get_process_calls(spec):
     # or the old function will stick around.
     return [
         'process_justification_and_finalization',
+        'process_inactivity_updates',  # altair
         'process_rewards_and_penalties',
         'process_registry_updates',
         'process_reveal_deadlines',  # custody game
@@ -26,7 +27,7 @@ def get_process_calls(spec):
         'process_participation_flag_updates' if is_post_altair(spec) else (
             'process_participation_record_updates'
         ),
-        'process_sync_committee_updates',
+        'process_sync_committee_updates',  # altair
         'process_shard_epoch_increment'  # sharding
     ]
 
diff --git a/tests/core/pyspec/eth2spec/test/helpers/inactivity_scores.py b/tests/core/pyspec/eth2spec/test/helpers/inactivity_scores.py
new file mode 100644
index 000000000..5c28bfc24
--- /dev/null
+++ b/tests/core/pyspec/eth2spec/test/helpers/inactivity_scores.py
@@ -0,0 +1,5 @@
+from random import Random
+
+
+def randomize_inactivity_scores(spec, state, minimum=0, maximum=50000, rng=Random(4242)):
+    state.inactivity_scores = [rng.randint(minimum, maximum) for _ in range(len(state.validators))]
diff --git a/tests/core/pyspec/eth2spec/test/helpers/rewards.py b/tests/core/pyspec/eth2spec/test/helpers/rewards.py
index 6bf922750..86bb70133 100644
--- a/tests/core/pyspec/eth2spec/test/helpers/rewards.py
+++ b/tests/core/pyspec/eth2spec/test/helpers/rewards.py
@@ -272,7 +272,6 @@ _cache_dict = LRU(size=10)
 
 
 def leaking(epochs=None):
-
     def deco(fn):
         def entry(*args, spec, state, **kw):
             # If the pre-state is not already known in the LRU, then take it,
diff --git a/tests/core/pyspec/eth2spec/test/phase0/rewards/test_random.py b/tests/core/pyspec/eth2spec/test/phase0/rewards/test_random.py
index ae44c6640..b1af64a77 100644
--- a/tests/core/pyspec/eth2spec/test/phase0/rewards/test_random.py
+++ b/tests/core/pyspec/eth2spec/test/phase0/rewards/test_random.py
@@ -39,8 +39,16 @@ def test_full_random_3(spec, state):
 @with_custom_state(balances_fn=low_balances, threshold_fn=lambda spec: spec.EJECTION_BALANCE)
 @spec_test
 @single_phase
-def test_full_random_low_balances(spec, state):
-    yield from rewards_helpers.run_test_full_random(spec, state)
+def test_full_random_low_balances_0(spec, state):
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(5050))
+
+
+@with_all_phases
+@with_custom_state(balances_fn=low_balances, threshold_fn=lambda spec: spec.EJECTION_BALANCE)
+@spec_test
+@single_phase
+def test_full_random_low_balances_1(spec, state):
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(6060))
 
 
 @with_all_phases
@@ -48,4 +56,4 @@ def test_full_random_low_balances(spec, state):
 @spec_test
 @single_phase
 def test_full_random_misc_balances(spec, state):
-    yield from rewards_helpers.run_test_full_random(spec, state)
+    yield from rewards_helpers.run_test_full_random(spec, state, rng=Random(7070))
diff --git a/tests/formats/epoch_processing/README.md b/tests/formats/epoch_processing/README.md
index 3ac2a28c4..d9abcaf98 100644
--- a/tests/formats/epoch_processing/README.md
+++ b/tests/formats/epoch_processing/README.md
@@ -32,9 +32,8 @@ The provided pre-state is already transitioned to just before the specific sub-t
 
 Sub-transitions:
 
-Sub-transitions:
-
 - `justification_and_finalization`
+- `inactivity_penalty_updates`
 - `rewards_and_penalties`
 - `registry_updates`
 - `slashings`
@@ -44,5 +43,6 @@ Sub-transitions:
 - `randao_mixes_reset`
 - `historical_roots_update`
 - `participation_record_updates`
+- `sync_committee_updates`
 
 The resulting state should match the expected `post` state.