diff --git a/module/data/item/armor.mjs b/module/data/item/armor.mjs
index f7cbd81..fe33de9 100644
--- a/module/data/item/armor.mjs
+++ b/module/data/item/armor.mjs
@@ -56,6 +56,15 @@ export default class ArmorData extends VagabondItemBase {
         min: 0,
       }),
 
+      // Slot cost when equipped (null means same as slots)
+      // Allows magic armor to reduce slot cost when worn
+      slotsWhenEquipped: new fields.NumberField({
+        integer: true,
+        initial: null,
+        nullable: true,
+        min: 0,
+      }),
+
       // Monetary value (in copper)
       value: new fields.NumberField({
         integer: true,
@@ -134,12 +143,16 @@ export default class ArmorData extends VagabondItemBase {
   }
 
   /**
-   * Calculate slot cost when equipped.
+   * Calculate the total inventory slot cost for this armor.
+   * Respects slotsWhenEquipped for magic armor that reduces slot cost when worn.
    *
-   * @returns {number} Slot cost
+   * @returns {number} Total slots used
    */
-  getEquippedSlots() {
-    return this.equipped ? this.slots : 0;
+  getTotalSlots() {
+    if (this.equipped && this.slotsWhenEquipped !== null) {
+      return this.slotsWhenEquipped;
+    }
+    return this.slots || 0;
   }
 
   /**
diff --git a/module/data/item/base-item.mjs b/module/data/item/base-item.mjs
index 5996e3e..c39b5b1 100644
--- a/module/data/item/base-item.mjs
+++ b/module/data/item/base-item.mjs
@@ -64,4 +64,15 @@ export default class VagabondItemBase extends foundry.abstract.TypeDataModel {
       description: this.description,
     };
   }
+
+  /**
+   * Calculate the total inventory slot cost for this item.
+   * Override in subclasses that have inventory slots (weapons, armor, equipment).
+   * Items without inventory presence (features, classes, ancestries) return 0.
+   *
+   * @returns {number} Total slots used
+   */
+  getTotalSlots() {
+    return 0;
+  }
 }
diff --git a/module/data/item/equipment.mjs b/module/data/item/equipment.mjs
index 8c88dbc..8ff43b2 100644
--- a/module/data/item/equipment.mjs
+++ b/module/data/item/equipment.mjs
@@ -38,6 +38,15 @@ export default class EquipmentData extends VagabondItemBase {
         min: 0,
       }),
 
+      // Slot cost when equipped (null means same as slots)
+      // Used for items like backpacks that cost 0 slots when worn
+      slotsWhenEquipped: new fields.NumberField({
+        integer: true,
+        initial: null,
+        nullable: true,
+        min: 0,
+      }),
+
       // Whether slots are per-item or for the whole stack
       slotsPerItem: new fields.BooleanField({ initial: false }),
 
@@ -125,14 +134,20 @@ export default class EquipmentData extends VagabondItemBase {
 
   /**
    * Calculate the total slot cost for this item stack.
+   * Respects slotsWhenEquipped for items like backpacks that cost
+   * less (or zero) slots when worn.
    *
    * @returns {number} Total slots used
    */
   getTotalSlots() {
+    // Use slotsWhenEquipped if item is equipped and the field is set
+    const baseSlots =
+      this.equipped && this.slotsWhenEquipped !== null ? this.slotsWhenEquipped : this.slots;
+
     if (this.slotsPerItem) {
-      return this.slots * this.quantity;
+      return baseSlots * this.quantity;
     }
-    return this.slots;
+    return baseSlots;
   }
 
   /**
diff --git a/module/data/item/weapon.mjs b/module/data/item/weapon.mjs
index 50f9a42..4103bb0 100644
--- a/module/data/item/weapon.mjs
+++ b/module/data/item/weapon.mjs
@@ -97,6 +97,15 @@ export default class WeaponData extends VagabondItemBase {
         min: 0,
       }),
 
+      // Slot cost when equipped (null means same as slots)
+      // Allows magic weapons to reduce slot cost when wielded
+      slotsWhenEquipped: new fields.NumberField({
+        integer: true,
+        initial: null,
+        nullable: true,
+        min: 0,
+      }),
+
       // Monetary value (in copper)
       value: new fields.NumberField({
         integer: true,
@@ -229,12 +238,15 @@ export default class WeaponData extends VagabondItemBase {
   }
 
   /**
-   * Calculate the slot cost when equipped.
+   * Calculate the total inventory slot cost for this weapon.
+   * Respects slotsWhenEquipped for magic weapons that reduce slot cost when wielded.
    *
-   * @returns {number} Slot cost
+   * @returns {number} Total slots used
    */
-  getEquippedSlots() {
-    return this.equipped ? this.slots : 0;
+  getTotalSlots() {
+    const baseSlots =
+      this.equipped && this.slotsWhenEquipped !== null ? this.slotsWhenEquipped : this.slots || 0;
+    return baseSlots * (this.quantity || 1);
   }
 
   /**
diff --git a/module/documents/actor.mjs b/module/documents/actor.mjs
index 8939536..4f96b15 100644
--- a/module/documents/actor.mjs
+++ b/module/documents/actor.mjs
@@ -205,13 +205,11 @@ export default class VagabondActor extends Actor {
     system.armor = totalArmor;
 
     // Calculate used item slots from inventory
+    // Each item type implements getTotalSlots() with its own logic
     let usedSlots = 0;
     for (const item of this.items) {
-      // Only count items that take slots (not features, classes, etc.)
-      if (["weapon", "armor", "equipment"].includes(item.type)) {
-        const slots = item.system.slots || 0;
-        const quantity = item.system.quantity || 1;
-        usedSlots += slots * quantity;
+      if (typeof item.system.getTotalSlots === "function") {
+        usedSlots += item.system.getTotalSlots();
       }
     }
     system.itemSlots.used = usedSlots;
diff --git a/module/documents/item.mjs b/module/documents/item.mjs
index cfbcd64..ac5e3e9 100644
--- a/module/documents/item.mjs
+++ b/module/documents/item.mjs
@@ -1101,6 +1101,49 @@ export default class VagabondItem extends Item {
   /*  Equipment Helpers                           */
   /* -------------------------------------------- */
 
+  /**
+   * Handle item updates. Sync equipment Active Effects with equipped state.
+   *
+   * @override
+   */
+  async _onUpdate(changed, options, userId) {
+    await super._onUpdate(changed, options, userId);
+
+    // Only process for the updating user
+    if (game.user.id !== userId) return;
+
+    // Sync equipment effects with equipped state
+    if (
+      ["weapon", "armor", "equipment"].includes(this.type) &&
+      changed.system?.equipped !== undefined &&
+      this.actor
+    ) {
+      await this._syncEquippedEffects(changed.system.equipped);
+    }
+  }
+
+  /**
+   * Sync Active Effects' disabled state with equipped state.
+   * Effects should be enabled when equipped, disabled when not.
+   *
+   * @private
+   * @param {boolean} equipped - The new equipped state
+   * @returns {Promise<void>}
+   */
+  async _syncEquippedEffects(equipped) {
+    // Find effects on the actor that originated from this item
+    const itemEffects = this.actor.effects.filter((e) => e.origin === this.uuid);
+    if (itemEffects.length === 0) return;
+
+    // Update disabled state: disabled = !equipped
+    const updates = itemEffects.map((effect) => ({
+      _id: effect.id,
+      disabled: !equipped,
+    }));
+
+    await this.actor.updateEmbeddedDocuments("ActiveEffect", updates);
+  }
+
   /**
    * Toggle the equipped state of this item.
    *
diff --git a/packs/_source/equipment/backpack.json b/packs/_source/equipment/backpack.json
index 14adccf..a60b28f 100644
--- a/packs/_source/equipment/backpack.json
+++ b/packs/_source/equipment/backpack.json
@@ -7,6 +7,7 @@
     "description": "<p>Grants +2 Slots, occupies 1 Slot (0 while worn). Can only benefit from one at a time.</p>",
     "quantity": 1,
     "slots": 1,
+    "slotsWhenEquipped": 0,
     "slotsPerItem": false,
     "value": 500,
     "consumable": false,
@@ -34,7 +35,21 @@
       "lore": ""
     }
   },
-  "effects": [],
+  "effects": [
+    {
+      "name": "Backpack Slot Bonus",
+      "icon": "icons/svg/item-bag.svg",
+      "changes": [
+        {
+          "key": "system.itemSlots.bonus",
+          "mode": 2,
+          "value": "2"
+        }
+      ],
+      "disabled": true,
+      "transfer": true
+    }
+  ],
   "_key": "!items!vagabondEquipBackpack",
   "reviewed": true
 }