diff --git a/cli/azd/pkg/infra/provisioning/terraform/terraform_provider.go b/cli/azd/pkg/infra/provisioning/terraform/terraform_provider.go
index c3b164f2256..aaf7c77004a 100644
--- a/cli/azd/pkg/infra/provisioning/terraform/terraform_provider.go
+++ b/cli/azd/pkg/infra/provisioning/terraform/terraform_provider.go
@@ -646,6 +646,9 @@ func (t *TerraformProvider) dataDirPath() string {
 }
 
 // Check terraform file for remote backend provider
+// Note: This uses simple string matching rather than full HCL parsing for performance and
+// to avoid additional dependencies. While this may have edge cases (e.g., backends mentioned
+// in comments), it's sufficient for the common case of detecting actual backend configurations.
 func (t *TerraformProvider) isRemoteBackendConfig() (bool, error) {
 	modulePath := t.modulePath()
 	infraDir, _ := os.Open(modulePath)
@@ -655,6 +658,23 @@ func (t *TerraformProvider) isRemoteBackendConfig() (bool, error) {
 		return false, fmt.Errorf("reading .tf files contents: %w", err)
 	}
 
+	// List of currently supported remote backend types that should not use the -state flag.
+	// This list includes all standard Terraform backends as of Terraform 1.3+
+	// (deprecated backends like etcd, swift, artifactory, and manta were removed in 1.3)
+	// Reference: https://developer.hashicorp.com/terraform/language/backend
+	remoteBackends := []string{
+		`backend "azurerm"`,    // Azure Resource Manager
+		`backend "remote"`,     // Terraform Cloud (legacy)
+		`backend "s3"`,         // AWS S3
+		`backend "gcs"`,        // Google Cloud Storage
+		`backend "consul"`,     // HashiCorp Consul
+		`backend "cos"`,        // Tencent Cloud Object Storage
+		`backend "http"`,       // HTTP/REST
+		`backend "kubernetes"`, // Kubernetes
+		`backend "oss"`,        // Alibaba Cloud OSS
+		`backend "pg"`,         // PostgreSQL
+	}
+
 	for index := range files {
 		if !files[index].IsDir() && filepath.Ext(files[index].Name()) == ".tf" {
 			fileContent, err := os.ReadFile(filepath.Join(modulePath, files[index].Name()))
@@ -663,8 +683,22 @@ func (t *TerraformProvider) isRemoteBackendConfig() (bool, error) {
 				return false, fmt.Errorf("error reading .tf files: %w", err)
 			}
 
-			if found := strings.Contains(string(fileContent), `backend "azurerm"`); found {
-				return true, nil
+			content := string(fileContent)
+
+			// Quick check: if the file doesn't contain "backend" keyword, skip detailed checks
+			if !strings.Contains(content, "backend") {
+				// Still need to check for Terraform Cloud "cloud {}" syntax
+				if strings.Contains(content, "terraform {") && strings.Contains(content, "cloud {") {
+					return true, nil
+				}
+				continue
+			}
+
+			// Check for standard backend blocks
+			for _, backend := range remoteBackends {
+				if strings.Contains(content, backend) {
+					return true, nil
+				}
 			}
 		}
 	}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/terraform_provider_test.go b/cli/azd/pkg/infra/provisioning/terraform/terraform_provider_test.go
index 7f1a9a98d41..5e696047fef 100644
--- a/cli/azd/pkg/infra/provisioning/terraform/terraform_provider_test.go
+++ b/cli/azd/pkg/infra/provisioning/terraform/terraform_provider_test.go
@@ -7,6 +7,8 @@ import (
 	"context"
 	_ "embed"
 	"fmt"
+	"os"
+	"path/filepath"
 	"regexp"
 	"strings"
 	"testing"
@@ -222,3 +224,142 @@ func (m *mockCurrentPrincipal) CurrentPrincipalId(_ context.Context) (string, er
 func (m *mockCurrentPrincipal) CurrentPrincipalType(_ context.Context) (provisioning.PrincipalType, error) {
 	return provisioning.UserType, nil
 }
+
+func TestIsRemoteBackendConfig(t *testing.T) {
+	tests := []struct {
+		name           string
+		backendFile    string
+		expectedRemote bool
+	}{
+		{
+			name:           "azurerm backend",
+			backendFile:    "azurerm.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "remote backend (Terraform Cloud legacy)",
+			backendFile:    "remote.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "cloud block (Terraform Cloud new syntax)",
+			backendFile:    "cloud.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "s3 backend",
+			backendFile:    "s3.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "gcs backend",
+			backendFile:    "gcs.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "consul backend",
+			backendFile:    "consul.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "http backend",
+			backendFile:    "http.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "kubernetes backend",
+			backendFile:    "kubernetes.tf",
+			expectedRemote: true,
+		},
+		{
+			name:           "local backend",
+			backendFile:    "local.tf",
+			expectedRemote: false,
+		},
+		{
+			name:           "no backend specified",
+			backendFile:    "no_backend.tf",
+			expectedRemote: false,
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			mockContext := mocks.NewMockContext(context.Background())
+			prepareGenericMocks(mockContext.CommandRunner)
+
+			// Create a temporary directory for the test
+			tmpDir := t.TempDir()
+			infraDir := filepath.Join(tmpDir, "infra")
+			err := os.MkdirAll(infraDir, 0755)
+			require.NoError(t, err)
+
+			// Copy the test backend file to the temporary infra directory
+			testDataPath := filepath.Join("testdata", "backend_tests", tt.backendFile)
+			testContent, err := os.ReadFile(testDataPath)
+			require.NoError(t, err)
+
+			// #nosec G306 -- test file permissions are intentionally readable
+			err = os.WriteFile(filepath.Join(infraDir, "main.tf"), testContent, 0644)
+			require.NoError(t, err)
+
+			// Create a TerraformProvider instance
+			options := provisioning.Options{
+				Module: "main",
+			}
+
+			env := environment.NewWithValues("test-env", map[string]string{
+				"AZURE_LOCATION":        "westus2",
+				"AZURE_SUBSCRIPTION_ID": "00000000-0000-0000-0000-000000000000",
+			})
+
+			resourceService := azapi.NewResourceService(
+				mockContext.SubscriptionCredentialProvider,
+				mockContext.ArmClientOptions,
+			)
+			accountManager := &mockaccount.MockAccountManager{
+				Subscriptions: []account.Subscription{
+					{
+						Id:   "00000000-0000-0000-0000-000000000000",
+						Name: "test",
+					},
+				},
+				Locations: []account.Location{
+					{
+						Name:                "location",
+						DisplayName:         "Test Location",
+						RegionalDisplayName: "(US) Test Location",
+					},
+				},
+			}
+
+			envManager := &mockenv.MockEnvManager{}
+			envManager.On("Save", mock.Anything, mock.Anything).Return(nil)
+
+			provider := NewTerraformProvider(
+				terraformTools.NewCli(mockContext.CommandRunner),
+				envManager,
+				env,
+				mockContext.Console,
+				&mockCurrentPrincipal{},
+				prompt.NewDefaultPrompter(
+					env,
+					mockContext.Console,
+					accountManager,
+					resourceService,
+					cloud.AzurePublic(),
+				),
+			)
+
+			err = provider.Initialize(*mockContext.Context, tmpDir, options)
+			require.NoError(t, err)
+
+			tfProvider := provider.(*TerraformProvider)
+
+			// Test the isRemoteBackendConfig function
+			isRemote, err := tfProvider.isRemoteBackendConfig()
+			require.NoError(t, err)
+			require.Equal(t, tt.expectedRemote, isRemote, "Expected isRemote=%v for %s", tt.expectedRemote, tt.name)
+		})
+	}
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/azurerm.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/azurerm.tf
new file mode 100644
index 00000000000..8d6d6a4778f
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/azurerm.tf
@@ -0,0 +1,9 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "azurerm" {
+    resource_group_name  = "rg-terraform-state"
+    storage_account_name = "tfstate"
+    container_name       = "tfstate"
+    key                  = "terraform.tfstate"
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/cloud.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/cloud.tf
new file mode 100644
index 00000000000..6269ecbddfc
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/cloud.tf
@@ -0,0 +1,10 @@
+terraform {
+  required_version = ">= 1.1.7"
+  cloud {
+    hostname     = "app.terraform.io"
+    organization = "my-org"
+    workspaces {
+      name = "my-workspace"
+    }
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/consul.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/consul.tf
new file mode 100644
index 00000000000..9c7e59a56cc
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/consul.tf
@@ -0,0 +1,7 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "consul" {
+    address = "consul.example.com"
+    path    = "terraform/state"
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/gcs.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/gcs.tf
new file mode 100644
index 00000000000..07cb9f415df
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/gcs.tf
@@ -0,0 +1,7 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "gcs" {
+    bucket = "my-tf-state-bucket"
+    prefix = "terraform/state"
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/http.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/http.tf
new file mode 100644
index 00000000000..691dcd80e77
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/http.tf
@@ -0,0 +1,8 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "http" {
+    address = "https://api.example.com/terraform/state"
+    lock_address = "https://api.example.com/terraform/lock"
+    unlock_address = "https://api.example.com/terraform/unlock"
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/kubernetes.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/kubernetes.tf
new file mode 100644
index 00000000000..a3189c29b9e
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/kubernetes.tf
@@ -0,0 +1,7 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "kubernetes" {
+    secret_suffix    = "state"
+    config_path      = "~/.kube/config"
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/local.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/local.tf
new file mode 100644
index 00000000000..6a4511a02c0
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/local.tf
@@ -0,0 +1,6 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "local" {
+    path = "terraform.tfstate"
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/no_backend.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/no_backend.tf
new file mode 100644
index 00000000000..ba1f1047643
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/no_backend.tf
@@ -0,0 +1,9 @@
+terraform {
+  required_version = ">= 1.1.7"
+  required_providers {
+    azurerm = {
+      source  = "hashicorp/azurerm"
+      version = "~> 3.0"
+    }
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/remote.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/remote.tf
new file mode 100644
index 00000000000..02cf9e508cc
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/remote.tf
@@ -0,0 +1,10 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "remote" {
+    hostname     = "app.terraform.io"
+    organization = "my-org"
+    workspaces {
+      name = "my-workspace"
+    }
+  }
+}
diff --git a/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/s3.tf b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/s3.tf
new file mode 100644
index 00000000000..e494039980c
--- /dev/null
+++ b/cli/azd/pkg/infra/provisioning/terraform/testdata/backend_tests/s3.tf
@@ -0,0 +1,8 @@
+terraform {
+  required_version = ">= 1.1.7"
+  backend "s3" {
+    bucket = "my-tf-state-bucket"
+    key    = "terraform.tfstate"
+    region = "us-east-1"
+  }
+}