diff --git a/internal/ignorefiles/terraformignore.go b/internal/ignorefiles/terraformignore.go
index 0ed3ac7..df7d569 100644
--- a/internal/ignorefiles/terraformignore.go
+++ b/internal/ignorefiles/terraformignore.go
@@ -58,7 +58,6 @@ func readRules(input io.Reader) ([]rule, error) {
 			pattern = "**" + string(os.PathSeparator) + pattern
 		}
 		rule.val = pattern
-		rule.dirs = strings.Split(pattern, string(os.PathSeparator))
 		rules = append(rules, rule)
 		currentRuleIndex += 1
 	}
@@ -73,7 +72,6 @@ type rule struct {
 	val            string         // the value of the rule itself
 	negated        bool           // prefixed by !, a negated rule
 	negationsAfter bool           // negatied rules appear after this rule
-	dirs           []string       // directories of the rule
 	regex          *regexp.Regexp // regular expression to match for the rule
 }
 
@@ -173,16 +171,20 @@ func (r *rule) compile() error {
 
 var defaultExclusions = []rule{
 	{
-		val:     strings.Join([]string{"**", ".git", "**"}, string(os.PathSeparator)),
-		negated: false,
+		val:            strings.Join([]string{"**", ".terraform", "**"}, string(os.PathSeparator)),
+		negated:        false,
+		negationsAfter: true,
 	},
+	// Place negation rules as high as possible in the list
 	{
-		val:     strings.Join([]string{"**", ".terraform", "**"}, string(os.PathSeparator)),
-		negated: false,
+		val:            strings.Join([]string{"**", ".terraform", "modules", "**"}, string(os.PathSeparator)),
+		negated:        true,
+		negationsAfter: false,
 	},
 	{
-		val:     strings.Join([]string{"**", ".terraform", "modules", "**"}, string(os.PathSeparator)),
-		negated: true,
+		val:            strings.Join([]string{"**", ".git", "**"}, string(os.PathSeparator)),
+		negated:        false,
+		negationsAfter: false,
 	},
 }
 
diff --git a/slug_test.go b/slug_test.go
index 3abbc03..c5eac8b 100644
--- a/slug_test.go
+++ b/slug_test.go
@@ -33,6 +33,39 @@ func TestPack(t *testing.T) {
 	assertArchiveFixture(t, slug, meta)
 }
 
+func TestPack_defaultRulesOnly(t *testing.T) {
+	slug := bytes.NewBuffer(nil)
+	meta, err := Pack("testdata/archive-dir-defaults-only", slug, true)
+	if err != nil {
+		t.Fatalf("err: %v", err)
+	}
+
+	// Make sure .terraform/modules/** are included.
+	subModuleDir := false
+
+	// Make sure .terraform/plugins are excluded.
+	pluginsDir := false
+
+	for _, file := range meta.Files {
+		if strings.HasPrefix(file, filepath.Clean(".terraform/modules/subdir/README")) {
+			subModuleDir = true
+			continue
+		}
+
+		if strings.HasPrefix(file, filepath.Clean(".terraform/plugins/")) {
+			pluginsDir = true
+			continue
+		}
+	}
+	if !subModuleDir {
+		t.Fatal("expected to include .terraform/modules/subdir/README")
+	}
+
+	if pluginsDir {
+		t.Fatal("expected to exclude .terraform/plugins")
+	}
+}
+
 func TestPack_rootIsSymlink(t *testing.T) {
 	for _, path := range []string{
 		"testdata/archive-dir",
diff --git a/testdata/archive-dir-defaults-only/.terraform/modules/README b/testdata/archive-dir-defaults-only/.terraform/modules/README
new file mode 100644
index 0000000..bc16944
--- /dev/null
+++ b/testdata/archive-dir-defaults-only/.terraform/modules/README
@@ -0,0 +1 @@
+Keep this file and directory here to test if its properly ignored
diff --git a/testdata/archive-dir-defaults-only/.terraform/modules/subdir/README b/testdata/archive-dir-defaults-only/.terraform/modules/subdir/README
new file mode 100644
index 0000000..bc16944
--- /dev/null
+++ b/testdata/archive-dir-defaults-only/.terraform/modules/subdir/README
@@ -0,0 +1 @@
+Keep this file and directory here to test if its properly ignored
diff --git a/testdata/archive-dir-defaults-only/.terraform/plugins/foo.txt b/testdata/archive-dir-defaults-only/.terraform/plugins/foo.txt
new file mode 100644
index 0000000..c2d32e1
--- /dev/null
+++ b/testdata/archive-dir-defaults-only/.terraform/plugins/foo.txt
@@ -0,0 +1 @@
+This file should be ignored
diff --git a/testdata/archive-dir-defaults-only/bar.txt b/testdata/archive-dir-defaults-only/bar.txt
new file mode 100644
index 0000000..5716ca5
--- /dev/null
+++ b/testdata/archive-dir-defaults-only/bar.txt
@@ -0,0 +1 @@
+bar