diff --git a/refs.c b/refs.c
index c83af63dc5..ba2573eb7a 100644
--- a/refs.c
+++ b/refs.c
@@ -5,6 +5,7 @@
 #define USE_THE_REPOSITORY_VARIABLE
 
 #include "git-compat-util.h"
+#include "abspath.h"
 #include "advice.h"
 #include "config.h"
 #include "environment.h"
@@ -2290,7 +2291,7 @@ static struct ref_store *ref_store_init(struct repository *repo,
 	if (!be)
 		BUG("reference backend is unknown");
 
-	refs = be->init(repo, gitdir, flags);
+	refs = be->init(repo, NULL, gitdir, flags);
 	return refs;
 }
 
@@ -3468,3 +3469,40 @@ const char *ref_transaction_error_msg(enum ref_transaction_error err)
 		return "unknown failure";
 	}
 }
+
+void refs_compute_filesystem_location(const char *gitdir, const char *payload,
+				      bool *is_worktree, struct strbuf *refdir,
+				      struct strbuf *ref_common_dir)
+{
+	struct strbuf sb = STRBUF_INIT;
+
+	*is_worktree = get_common_dir_noenv(ref_common_dir, gitdir);
+
+	if (!payload) {
+		/*
+		 * We can use the 'gitdir' as the 'refdir' without appending the
+		 * worktree path, as the 'gitdir' here is already the worktree
+		 * path and is different from 'commondir' denoted by 'ref_common_dir'.
+		 */
+		strbuf_addstr(refdir, gitdir);
+		return;
+	}
+
+	if (!is_absolute_path(payload)) {
+		strbuf_addf(&sb, "%s/%s", ref_common_dir->buf, payload);
+		strbuf_realpath(ref_common_dir, sb.buf, 1);
+	} else {
+		strbuf_realpath(ref_common_dir, payload, 1);
+	}
+
+	strbuf_addbuf(refdir, ref_common_dir);
+
+	if (*is_worktree) {
+		const char *wt_id = strrchr(gitdir, '/');
+		if (!wt_id)
+			BUG("worktree path does not contain slash");
+		strbuf_addf(refdir, "/worktrees/%s", wt_id + 1);
+	}
+
+	strbuf_release(&sb);
+}
diff --git a/refs/files-backend.c b/refs/files-backend.c
index d3f6423261..9cde3ba724 100644
--- a/refs/files-backend.c
+++ b/refs/files-backend.c
@@ -106,19 +106,24 @@ static void clear_loose_ref_cache(struct files_ref_store *refs)
  * set of caches.
  */
 static struct ref_store *files_ref_store_init(struct repository *repo,
+					      const char *payload,
 					      const char *gitdir,
 					      unsigned int flags)
 {
 	struct files_ref_store *refs = xcalloc(1, sizeof(*refs));
 	struct ref_store *ref_store = (struct ref_store *)refs;
-	struct strbuf sb = STRBUF_INIT;
+	struct strbuf ref_common_dir = STRBUF_INIT;
+	struct strbuf refdir = STRBUF_INIT;
+	bool is_worktree;
 
-	base_ref_store_init(ref_store, repo, gitdir, &refs_be_files);
+	refs_compute_filesystem_location(gitdir, payload, &is_worktree, &refdir,
+					 &ref_common_dir);
+
+	base_ref_store_init(ref_store, repo, refdir.buf, &refs_be_files);
 	refs->store_flags = flags;
-	get_common_dir_noenv(&sb, gitdir);
-	refs->gitcommondir = strbuf_detach(&sb, NULL);
+	refs->gitcommondir = strbuf_detach(&ref_common_dir, NULL);
 	refs->packed_ref_store =
-		packed_ref_store_init(repo, refs->gitcommondir, flags);
+		packed_ref_store_init(repo, NULL, refs->gitcommondir, flags);
 	refs->log_all_ref_updates = repo_settings_get_log_all_ref_updates(repo);
 	repo_config_get_bool(repo, "core.prefersymlinkrefs", &refs->prefer_symlink_refs);
 
@@ -126,6 +131,8 @@ static struct ref_store *files_ref_store_init(struct repository *repo,
 	chdir_notify_reparent("files-backend $GIT_COMMONDIR",
 			      &refs->gitcommondir);
 
+	strbuf_release(&refdir);
+
 	return ref_store;
 }
 
diff --git a/refs/packed-backend.c b/refs/packed-backend.c
index 4ea0c12299..e7bb9f10f9 100644
--- a/refs/packed-backend.c
+++ b/refs/packed-backend.c
@@ -211,7 +211,12 @@ static size_t snapshot_hexsz(const struct snapshot *snapshot)
 	return snapshot->refs->base.repo->hash_algo->hexsz;
 }
 
+/*
+ * Since packed-refs is only stored in the common dir, don't parse the
+ * payload and rely on the files-backend to set 'gitdir' correctly.
+ */
 struct ref_store *packed_ref_store_init(struct repository *repo,
+					const char *payload UNUSED,
 					const char *gitdir,
 					unsigned int store_flags)
 {
diff --git a/refs/packed-backend.h b/refs/packed-backend.h
index 9481d5e7c2..2c2377a356 100644
--- a/refs/packed-backend.h
+++ b/refs/packed-backend.h
@@ -14,6 +14,7 @@ struct ref_transaction;
  */
 
 struct ref_store *packed_ref_store_init(struct repository *repo,
+					const char *payload,
 					const char *gitdir,
 					unsigned int store_flags);
 
diff --git a/refs/refs-internal.h b/refs/refs-internal.h
index c7d2a6e50b..4fb8fdb872 100644
--- a/refs/refs-internal.h
+++ b/refs/refs-internal.h
@@ -389,6 +389,7 @@ struct ref_store;
  * the ref_store and to record the ref_store for later lookup.
  */
 typedef struct ref_store *ref_store_init_fn(struct repository *repo,
+					    const char *payload,
 					    const char *gitdir,
 					    unsigned int flags);
 /*
@@ -666,4 +667,17 @@ enum ref_transaction_error refs_verify_refnames_available(struct ref_store *refs
 					  unsigned int initial_transaction,
 					  struct strbuf *err);
 
+/*
+ * Given a gitdir and the reference storage payload provided, retrieve the
+ * 'refdir' and 'ref_common_dir'. The former is where references should be
+ * stored for the current worktree, the latter is the common reference
+ * directory if working with a linked worktree. If working with the main
+ * worktree, both values will be the same.
+ *
+ * This is used by backends that store references in the repository directly.
+ */
+void refs_compute_filesystem_location(const char *gitdir, const char *payload,
+				      bool *is_worktree, struct strbuf *refdir,
+				      struct strbuf *ref_common_dir);
+
 #endif /* REFS_REFS_INTERNAL_H */
diff --git a/refs/reftable-backend.c b/refs/reftable-backend.c
index 6ce7f9bb8e..0e220d6bb5 100644
--- a/refs/reftable-backend.c
+++ b/refs/reftable-backend.c
@@ -372,18 +372,24 @@ static int reftable_be_fsync(int fd)
 }
 
 static struct ref_store *reftable_be_init(struct repository *repo,
+					  const char *payload,
 					  const char *gitdir,
 					  unsigned int store_flags)
 {
 	struct reftable_ref_store *refs = xcalloc(1, sizeof(*refs));
+	struct strbuf ref_common_dir = STRBUF_INIT;
+	struct strbuf refdir = STRBUF_INIT;
 	struct strbuf path = STRBUF_INIT;
-	int is_worktree;
+	bool is_worktree;
 	mode_t mask;
 
 	mask = umask(0);
 	umask(mask);
 
-	base_ref_store_init(&refs->base, repo, gitdir, &refs_be_reftable);
+	refs_compute_filesystem_location(gitdir, payload, &is_worktree, &refdir,
+					 &ref_common_dir);
+
+	base_ref_store_init(&refs->base, repo, refdir.buf, &refs_be_reftable);
 	strmap_init(&refs->worktree_backends);
 	refs->store_flags = store_flags;
 	refs->log_all_ref_updates = repo_settings_get_log_all_ref_updates(repo);
@@ -419,14 +425,11 @@ static struct ref_store *reftable_be_init(struct repository *repo,
 	/*
 	 * Set up the main reftable stack that is hosted in GIT_COMMON_DIR.
 	 * This stack contains both the shared and the main worktree refs.
-	 *
-	 * Note that we don't try to resolve the path in case we have a
-	 * worktree because `get_common_dir_noenv()` already does it for us.
 	 */
-	is_worktree = get_common_dir_noenv(&path, gitdir);
+	strbuf_addbuf(&path, &ref_common_dir);
 	if (!is_worktree) {
 		strbuf_reset(&path);
-		strbuf_realpath(&path, gitdir, 0);
+		strbuf_realpath(&path, ref_common_dir.buf, 0);
 	}
 	strbuf_addstr(&path, "/reftable");
 	refs->err = reftable_backend_init(&refs->main_backend, path.buf,
@@ -443,10 +446,9 @@ static struct ref_store *reftable_be_init(struct repository *repo,
 	 * do it efficiently.
 	 */
 	if (is_worktree) {
-		strbuf_reset(&path);
-		strbuf_addf(&path, "%s/reftable", gitdir);
+		strbuf_addstr(&refdir, "/reftable");
 
-		refs->err = reftable_backend_init(&refs->worktree_backend, path.buf,
+		refs->err = reftable_backend_init(&refs->worktree_backend, refdir.buf,
 						  &refs->write_options);
 		if (refs->err)
 			goto done;
@@ -456,6 +458,8 @@ static struct ref_store *reftable_be_init(struct repository *repo,
 
 done:
 	assert(refs->err != REFTABLE_API_ERROR);
+	strbuf_release(&ref_common_dir);
+	strbuf_release(&refdir);
 	strbuf_release(&path);
 	return &refs->base;
 }