diff --git a/tests/unit/useNewTransactionsTest.ts b/tests/unit/useNewTransactionsTest.ts
new file mode 100644
index 000000000000..fe8ca1290813
--- /dev/null
+++ b/tests/unit/useNewTransactionsTest.ts
@@ -0,0 +1,299 @@
+import {renderHook} from '@testing-library/react-native';
+import useNewTransactions from '@hooks/useNewTransactions';
+import type {Transaction} from '@src/types/onyx';
+
+// We need to mock requestAnimationFrame to mimic long Onyx merge overhead
+jest.spyOn(global, 'requestAnimationFrame').mockImplementation((callback: FrameRequestCallback) => {
+    setTimeout(() => {
+        callback(performance.now());
+    }, 30);
+    return 0;
+});
+
+const delay = (ms: number) =>
+    new Promise((resolve) => {
+        setTimeout(resolve, ms);
+    });
+
+describe('useNewTransactions with empty cache', () => {
+    const transactionsAlreadyInReport = [
+        {transactionID: '2', amount: 200, created: '2023-10-02', currency: 'USD', reportID: 'report1', merchant: ''},
+        {transactionID: '3', amount: 300, created: '2023-10-03', currency: 'USD', reportID: 'report1', merchant: ''},
+    ];
+    const newTransaction = {transactionID: '1', amount: 100, created: '2023-10-01T00:00:00Z', currency: 'USD', reportID: 'report1', merchant: ''};
+
+    it("doesn't return new transactions when no transactions are added", () => {
+        // 1. Report and transactions data is not loaded yet
+        const {rerender, result} = renderHook<Transaction[], {transactions: Transaction[]; hasOnceLoadedReportActions: boolean}>(
+            (props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions),
+            {
+                initialProps: {
+                    hasOnceLoadedReportActions: false,
+                    transactions: [],
+                },
+            },
+        );
+
+        // 2. Report is loaded and it has no transactions so there are no further rerenders
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [],
+        });
+        expect(result.current).toEqual([]);
+    });
+
+    it('returns no new transactions when transactions come from initial Report load', () => {
+        // 1. Report and transactions data is not loaded yet
+        const {rerender, result} = renderHook<Transaction[], {transactions: Transaction[]; hasOnceLoadedReportActions: boolean}>(
+            (props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions),
+            {
+                initialProps: {
+                    hasOnceLoadedReportActions: false,
+                    transactions: [],
+                },
+            },
+        );
+        expect(result.current).toEqual([]);
+
+        // 2. Report is loaded and transactions data is not loaded yet
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [],
+        });
+        expect(result.current).toEqual([]);
+
+        // 3. Report is loaded and transactions data is loaded
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: transactionsAlreadyInReport,
+        });
+        // there is no new transactions, because the transactions that were already in the report are not considered new
+        expect(result.current).toEqual([]);
+    });
+
+    it('returns new transactions when transactions are added after initial load', () => {
+        // 1. Report and transactions data is not loaded yet
+        const {rerender, result} = renderHook<Transaction[], {transactions: Transaction[]; hasOnceLoadedReportActions: boolean}>(
+            (props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions),
+            {
+                initialProps: {
+                    hasOnceLoadedReportActions: false,
+                    transactions: [],
+                },
+            },
+        );
+        expect(result.current).toEqual([]);
+
+        // 2. Report is loaded and transactions data is not loaded yet
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [],
+        });
+        expect(result.current).toEqual([]);
+
+        // 3. Report is loaded and transactions data is loaded
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: transactionsAlreadyInReport,
+        });
+        expect(result.current).toEqual([]);
+
+        // 4. User added new transaction
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [...transactionsAlreadyInReport, newTransaction],
+        });
+        expect(result.current).toEqual([newTransaction]);
+    });
+
+    it('returns new transactions when adding transactions to empty report', async () => {
+        // 1. Report and transactions data is not loaded yet
+        const {rerender, result} = renderHook<Transaction[], {transactions: Transaction[]; hasOnceLoadedReportActions: boolean}>(
+            (props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions),
+            {
+                initialProps: {
+                    hasOnceLoadedReportActions: false,
+                    transactions: [],
+                },
+            },
+        );
+
+        // 2. Report is loaded and it has no transactions so there are no further rerenders
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [],
+        });
+        await delay(1000); // We need to wait to ensure that the skipFirstTransactionsChange is set to false by the useEffect
+        expect(result.current).toEqual([]);
+
+        // 3. User added new transaction
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [newTransaction],
+        });
+        expect(result.current).toEqual([newTransaction]);
+    });
+
+    it('returns no new transactions when transactions are removed', () => {
+        // 1. Report and transactions data is not loaded yet
+        const {rerender, result} = renderHook<Transaction[], {transactions: Transaction[]; hasOnceLoadedReportActions: boolean}>(
+            (props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions),
+            {
+                initialProps: {
+                    hasOnceLoadedReportActions: false,
+                    transactions: [],
+                },
+            },
+        );
+        expect(result.current).toEqual([]);
+
+        // 2. Report is loaded and transactions data is not loaded yet
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [],
+        });
+        expect(result.current).toEqual([]);
+
+        // 3. Report is loaded and transactions data is loaded
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: transactionsAlreadyInReport,
+        });
+        expect(result.current).toEqual([]);
+
+        // 4. User removes a transaction
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: transactionsAlreadyInReport.slice(1),
+        });
+        expect(result.current).toEqual([]);
+    });
+});
+
+describe('useNewTransactions with transactions in cache', () => {
+    const transactionsAlreadyInReport = [
+        {transactionID: '2', amount: 200, created: '2023-10-02', currency: 'USD', reportID: 'report1', merchant: ''},
+        {transactionID: '3', amount: 300, created: '2023-10-03', currency: 'USD', reportID: 'report1', merchant: ''},
+    ];
+    const newTransaction = {transactionID: '1', amount: 100, created: '2023-10-01T00:00:00Z', currency: 'USD', reportID: 'report1', merchant: ''};
+
+    it("doesn't return new transactions when no transactions are added", () => {
+        // 1. Report and transactions data is loaded from Onyx
+        const {rerender, result} = renderHook<Transaction[], {transactions: Transaction[]; hasOnceLoadedReportActions: boolean}>(
+            (props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions),
+            {
+                initialProps: {
+                    hasOnceLoadedReportActions: true,
+                    transactions: [],
+                },
+            },
+        );
+
+        // 2. Report is loaded and transactions data is loaded, but there were no new transactions
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [],
+        });
+        expect(result.current).toEqual([]);
+    });
+
+    it('returns new transactions when newly added transactions come from initial Report load', () => {
+        // 1. Report and transactions data is loaded from Onyx
+        const {rerender, result} = renderHook((props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions), {
+            initialProps: {
+                hasOnceLoadedReportActions: true,
+                transactions: transactionsAlreadyInReport,
+            },
+        });
+        expect(result.current).toEqual([]);
+
+        // 2. New transaction comes in when report is loaded
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [...transactionsAlreadyInReport, newTransaction],
+        });
+        expect(result.current).toEqual([newTransaction]);
+    });
+
+    it('returns new transactions when transactions are added after initial load', () => {
+        // 1. Report and transactions data is loaded from Onyx
+        const {rerender, result} = renderHook((props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions), {
+            initialProps: {
+                hasOnceLoadedReportActions: true,
+                transactions: transactionsAlreadyInReport,
+            },
+        });
+        expect(result.current).toEqual([]);
+
+        // 2. Report is loaded and transactions data is loaded, but there were no new transactions
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: transactionsAlreadyInReport,
+        });
+        expect(result.current).toEqual([]);
+
+        // 3. User added new transaction
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [...transactionsAlreadyInReport, newTransaction],
+        });
+        expect(result.current).toEqual([newTransaction]);
+    });
+
+    it('returns new transactions when adding transactions to empty report', async () => {
+        // 1. Report and transactions data is loaded from Onyx
+        const {rerender, result} = renderHook<Transaction[], {transactions: Transaction[]; hasOnceLoadedReportActions: boolean}>(
+            (props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions),
+            {
+                initialProps: {
+                    hasOnceLoadedReportActions: true,
+                    transactions: [],
+                },
+            },
+        );
+
+        // 2. Report is loaded and it has no transactions, so there are no further rerenders
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [],
+        });
+        await delay(1000);
+        expect(result.current).toEqual([]);
+
+        // 3. User added new transaction
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: [newTransaction],
+        });
+        expect(result.current).toEqual([newTransaction]);
+    });
+
+    it('returns no new transactions when transactions are removed', () => {
+        // 1. Report and transactions data is loaded from Onyx
+        const {rerender, result} = renderHook((props) => useNewTransactions(props.hasOnceLoadedReportActions, props.transactions), {
+            initialProps: {
+                hasOnceLoadedReportActions: true,
+                transactions: transactionsAlreadyInReport,
+            },
+        });
+        expect(result.current).toEqual([]);
+
+        // 2. Report is loaded and transactions data is loaded, but there were no new transactions
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: transactionsAlreadyInReport,
+        });
+        expect(result.current).toEqual([]);
+
+        // 3. User removes a transaction
+        rerender({
+            hasOnceLoadedReportActions: true,
+            transactions: transactionsAlreadyInReport.slice(1),
+        });
+        expect(result.current).toEqual([]);
+    });
+});
+
+afterAll(() => {
+    jest.restoreAllMocks();
+});