diff --git a/funding/manager.go b/funding/manager.go
index cb948a4b6..681183487 100644
--- a/funding/manager.go
+++ b/funding/manager.go
@@ -131,7 +131,7 @@ var (
 // via a local signal such as RPC.
 //
 // TODO(roasbeef): actually use the context package
-//  * deadlines, etc.
+//   - deadlines, etc.
 type reservationWithCtx struct {
 	reservation *lnwallet.ChannelReservation
 	peer        lnpeer.Peer
@@ -1486,16 +1486,7 @@ func (f *Manager) handleFundingOpen(peer lnpeer.Peer,
 	// (if any) in lieu of user input.
 	shutdown, err := getUpfrontShutdownScript(
 		f.cfg.EnableUpfrontShutdown, peer, acceptorResp.UpfrontShutdown,
-		func() (lnwire.DeliveryAddress, error) {
-			addr, err := f.cfg.Wallet.NewAddress(
-				lnwallet.WitnessPubKey, false,
-				lnwallet.DefaultAccountName,
-			)
-			if err != nil {
-				return nil, err
-			}
-			return txscript.PayToAddrScript(addr)
-		},
+		f.selectShutdownScript,
 	)
 	if err != nil {
 		f.failFundingFlow(
@@ -3689,7 +3680,7 @@ func (f *Manager) InitFundingWorkflow(msg *InitFundingMsg) {
 // upfront shutdown scripts automatically.
 func getUpfrontShutdownScript(enableUpfrontShutdown bool, peer lnpeer.Peer,
 	script lnwire.DeliveryAddress,
-	getScript func() (lnwire.DeliveryAddress, error)) (lnwire.DeliveryAddress,
+	getScript func(bool) (lnwire.DeliveryAddress, error)) (lnwire.DeliveryAddress,
 	error) {
 
 	// Check whether the remote peer supports upfront shutdown scripts.
@@ -3721,7 +3712,12 @@ func getUpfrontShutdownScript(enableUpfrontShutdown bool, peer lnpeer.Peer,
 		return nil, nil
 	}
 
-	return getScript()
+	// We can safely send a taproot address iff, both sides have negotiated
+	// the shutdown-any-segwit feature.
+	taprootOK := peer.RemoteFeatures().HasFeature(lnwire.ShutdownAnySegwitOptional) &&
+		peer.LocalFeatures().HasFeature(lnwire.ShutdownAnySegwitOptional)
+
+	return getScript(taprootOK)
 }
 
 // handleInitFundingMsg creates a channel reservation within the daemon's
@@ -3780,18 +3776,8 @@ func (f *Manager) handleInitFundingMsg(msg *InitFundingMsg) {
 	// address from the wallet if our node is configured to set shutdown
 	// address by default).
 	shutdown, err := getUpfrontShutdownScript(
-		f.cfg.EnableUpfrontShutdown, msg.Peer,
-		msg.ShutdownScript,
-		func() (lnwire.DeliveryAddress, error) {
-			addr, err := f.cfg.Wallet.NewAddress(
-				lnwallet.WitnessPubKey, false,
-				lnwallet.DefaultAccountName,
-			)
-			if err != nil {
-				return nil, err
-			}
-			return txscript.PayToAddrScript(addr)
-		},
+		f.cfg.EnableUpfrontShutdown, msg.Peer, msg.ShutdownScript,
+		f.selectShutdownScript,
 	)
 	if err != nil {
 		msg.Err <- err
@@ -4270,3 +4256,24 @@ func (f *Manager) deleteChannelOpeningState(chanPoint *wire.OutPoint) error {
 		outpointBytes.Bytes(),
 	)
 }
+
+// selectShutdownScript selects the shutdown script we should send to the peer.
+// If we can use taproot, then we prefer that, otherwise we'll use a p2wkh
+// script.
+func (f *Manager) selectShutdownScript(taprootOK bool,
+) (lnwire.DeliveryAddress, error) {
+
+	addrType := lnwallet.WitnessPubKey
+	if taprootOK {
+		addrType = lnwallet.TaprootPubkey
+	}
+
+	addr, err := f.cfg.Wallet.NewAddress(
+		addrType, false, lnwallet.DefaultAccountName,
+	)
+	if err != nil {
+		return nil, err
+	}
+
+	return txscript.PayToAddrScript(addr)
+}
diff --git a/funding/manager_test.go b/funding/manager_test.go
index 93b450a73..0b353d531 100644
--- a/funding/manager_test.go
+++ b/funding/manager_test.go
@@ -3331,13 +3331,13 @@ func TestGetUpfrontShutdownScript(t *testing.T) {
 	upfrontScript := []byte("upfront script")
 	generatedScript := []byte("generated script")
 
-	getScript := func() (lnwire.DeliveryAddress, error) {
+	getScript := func(_ bool) (lnwire.DeliveryAddress, error) {
 		return generatedScript, nil
 	}
 
 	tests := []struct {
 		name           string
-		getScript      func() (lnwire.DeliveryAddress, error)
+		getScript      func(bool) (lnwire.DeliveryAddress, error)
 		upfrontScript  lnwire.DeliveryAddress
 		peerEnabled    bool
 		localEnabled   bool
@@ -3628,14 +3628,14 @@ func TestFundingManagerUpfrontShutdown(t *testing.T) {
 			pkscript: []byte("\xa9\x14\xfe\x44\x10\x65\xb6\x53" +
 				"\x22\x31\xde\x2f\xac\x56\x31\x52\x20\x5e" +
 				"\xc4\xf5\x9c\x74\x87"),
-			expectErr: false,
+			expectErr: true,
 		},
 		{
 			name: "p2pkh script",
 			pkscript: []byte("\x76\xa9\x14\x64\x1a\xd5\x05\x1e" +
 				"\xdd\x97\x02\x9a\x00\x3f\xe9\xef\xb2\x93" +
 				"\x59\xfc\xee\x40\x9d\x88\xac"),
-			expectErr: false,
+			expectErr: true,
 		},
 		{
 			name: "p2wpkh script",