diff --git a/internal/cloud/backend.go b/internal/cloud/backend.go
index 22adb98d17..0356740b09 100644
--- a/internal/cloud/backend.go
+++ b/internal/cloud/backend.go
@@ -940,9 +940,9 @@ func (b *Cloud) VerifyWorkspaceTerraformVersion(workspaceName string) tfdiags.Di
 		// are aware of are:
 		//
 		// - 0.14.0 is guaranteed to be compatible with versions up to but not
-		//   including 1.1.0
-		v110 := version.Must(version.NewSemver("1.1.0"))
-		if tfversion.SemVer.LessThan(v110) && remoteVersion.LessThan(v110) {
+		//   including 1.2.0
+		v120 := version.Must(version.NewSemver("1.2.0"))
+		if tfversion.SemVer.LessThan(v120) && remoteVersion.LessThan(v120) {
 			return diags
 		}
 		// - Any new Terraform state version will require at least minor patch
diff --git a/internal/cloud/backend_test.go b/internal/cloud/backend_test.go
index 9ac894467d..4c3546ec5f 100644
--- a/internal/cloud/backend_test.go
+++ b/internal/cloud/backend_test.go
@@ -896,7 +896,8 @@ func TestCloud_VerifyWorkspaceTerraformVersion(t *testing.T) {
 		{"0.14.0", "0.13.5", false, false},
 		{"0.14.0", "0.14.1", true, false},
 		{"0.14.0", "1.0.99", true, false},
-		{"0.14.0", "1.1.0", true, true},
+		{"0.14.0", "1.1.0", true, false},
+		{"0.14.0", "1.2.0", true, true},
 		{"1.2.0", "1.2.99", true, false},
 		{"1.2.0", "1.3.0", true, true},
 		{"0.15.0", "latest", true, false},