diff --git a/client/firewall/uspfilter/localip.go b/client/firewall/uspfilter/localip.go
new file mode 100644
index 000000000..9636e1cc9
--- /dev/null
+++ b/client/firewall/uspfilter/localip.go
@@ -0,0 +1,128 @@
+package uspfilter
+
+import (
+	"fmt"
+	"net"
+	"sync"
+
+	log "github.com/sirupsen/logrus"
+
+	"github.com/netbirdio/netbird/client/firewall/uspfilter/common"
+)
+
+type localIPManager struct {
+	mu sync.RWMutex
+
+	// Use bitmap for IPv4 (32 bits * 2^16 = 8KB memory)
+	ipv4Bitmap [1 << 16]uint32
+}
+
+func newLocalIPManager() *localIPManager {
+	return &localIPManager{}
+}
+
+func (m *localIPManager) setBitmapBit(ip net.IP) {
+	ipv4 := ip.To4()
+	if ipv4 == nil {
+		return
+	}
+	high := (uint16(ipv4[0]) << 8) | uint16(ipv4[1])
+	low := (uint16(ipv4[2]) << 8) | uint16(ipv4[3])
+	m.ipv4Bitmap[high] |= 1 << (low % 32)
+}
+
+func (m *localIPManager) checkBitmapBit(ip net.IP) bool {
+	ipv4 := ip.To4()
+	if ipv4 == nil {
+		return false
+	}
+	high := (uint16(ipv4[0]) << 8) | uint16(ipv4[1])
+	low := (uint16(ipv4[2]) << 8) | uint16(ipv4[3])
+	return (m.ipv4Bitmap[high] & (1 << (low % 32))) != 0
+}
+
+func (m *localIPManager) processIP(ip net.IP, newIPv4Bitmap *[1 << 16]uint32, ipv4Set map[string]struct{}, ipv4Addresses *[]string) error {
+	if ipv4 := ip.To4(); ipv4 != nil {
+		high := (uint16(ipv4[0]) << 8) | uint16(ipv4[1])
+		low := (uint16(ipv4[2]) << 8) | uint16(ipv4[3])
+		if int(high) >= len(*newIPv4Bitmap) {
+			return fmt.Errorf("invalid IPv4 address: %s", ip)
+		}
+		ipStr := ip.String()
+		if _, exists := ipv4Set[ipStr]; !exists {
+			ipv4Set[ipStr] = struct{}{}
+			*ipv4Addresses = append(*ipv4Addresses, ipStr)
+			(*newIPv4Bitmap)[high] |= 1 << (low % 32)
+		}
+	}
+	return nil
+}
+
+func (m *localIPManager) processInterface(iface net.Interface, newIPv4Bitmap *[1 << 16]uint32, ipv4Set map[string]struct{}, ipv4Addresses *[]string) {
+	addrs, err := iface.Addrs()
+	if err != nil {
+		log.Debugf("get addresses for interface %s failed: %v", iface.Name, err)
+		return
+	}
+
+	for _, addr := range addrs {
+		var ip net.IP
+		switch v := addr.(type) {
+		case *net.IPNet:
+			ip = v.IP
+		case *net.IPAddr:
+			ip = v.IP
+		default:
+			continue
+		}
+
+		if err := m.processIP(ip, newIPv4Bitmap, ipv4Set, ipv4Addresses); err != nil {
+			log.Debugf("process IP failed: %v", err)
+		}
+	}
+}
+
+func (m *localIPManager) UpdateLocalIPs(iface common.IFaceMapper) (err error) {
+	defer func() {
+		if r := recover(); r != nil {
+			err = fmt.Errorf("panic: %v", r)
+		}
+	}()
+
+	interfaces, err := net.Interfaces()
+	if err != nil {
+		return fmt.Errorf("get interfaces: %w", err)
+	}
+
+	var newIPv4Bitmap [1 << 16]uint32
+	ipv4Set := make(map[string]struct{})
+	var ipv4Addresses []string
+
+	if iface != nil {
+		if err := m.processIP(iface.Address().IP, &newIPv4Bitmap, ipv4Set, &ipv4Addresses); err != nil {
+			return err
+		}
+	}
+
+	for _, intf := range interfaces {
+		m.processInterface(intf, &newIPv4Bitmap, ipv4Set, &ipv4Addresses)
+	}
+
+	m.mu.Lock()
+	m.ipv4Bitmap = newIPv4Bitmap
+	m.mu.Unlock()
+
+	log.Debugf("Local IPv4 addresses: %v", ipv4Addresses)
+	return nil
+}
+
+func (m *localIPManager) IsLocalIP(ip net.IP) bool {
+	m.mu.RLock()
+	defer m.mu.RUnlock()
+
+	if ipv4 := ip.To4(); ipv4 != nil {
+		return m.checkBitmapBit(ipv4)
+	}
+
+	return false
+}
diff --git a/client/firewall/uspfilter/localip_test.go b/client/firewall/uspfilter/localip_test.go
new file mode 100644
index 000000000..f179fb2e3
--- /dev/null
+++ b/client/firewall/uspfilter/localip_test.go
@@ -0,0 +1,93 @@
+package uspfilter
+
+import (
+	"net"
+	"testing"
+)
+
+// MapImplementation is a version using map[string]struct{}
+type MapImplementation struct {
+	localIPs map[string]struct{}
+}
+
+func BenchmarkIPChecks(b *testing.B) {
+	interfaces := make([]net.IP, 16)
+	for i := range interfaces {
+		interfaces[i] = net.IPv4(10, 0, byte(i>>8), byte(i))
+	}
+
+	// Setup bitmap version
+	bitmapManager := &localIPManager{
+		ipv4Bitmap: [1 << 16]uint32{},
+	}
+	for _, ip := range interfaces[:8] { // Add half of IPs
+		bitmapManager.setBitmapBit(ip)
+	}
+
+	// Setup map version
+	mapManager := &MapImplementation{
+		localIPs: make(map[string]struct{}),
+	}
+	for _, ip := range interfaces[:8] {
+		mapManager.localIPs[ip.String()] = struct{}{}
+	}
+
+	b.Run("Bitmap_Hit", func(b *testing.B) {
+		ip := interfaces[4]
+		b.ResetTimer()
+		for i := 0; i < b.N; i++ {
+			bitmapManager.checkBitmapBit(ip)
+		}
+	})
+
+	b.Run("Bitmap_Miss", func(b *testing.B) {
+		ip := interfaces[12]
+		b.ResetTimer()
+		for i := 0; i < b.N; i++ {
+			bitmapManager.checkBitmapBit(ip)
+		}
+	})
+
+	b.Run("Map_Hit", func(b *testing.B) {
+		ip := interfaces[4]
+		b.ResetTimer()
+		for i := 0; i < b.N; i++ {
+			_, _ = mapManager.localIPs[ip.String()]
+		}
+	})
+
+	b.Run("Map_Miss", func(b *testing.B) {
+		ip := interfaces[12]
+		b.ResetTimer()
+		for i := 0; i < b.N; i++ {
+			_, _ = mapManager.localIPs[ip.String()]
+		}
+	})
+}
+
+func BenchmarkWGPosition(b *testing.B) {
+	wgIP := net.ParseIP("10.10.0.1")
+
+	// Create two managers - one checks WG IP first, other checks it last
+	b.Run("WG_First", func(b *testing.B) {
+		bm := &localIPManager{ipv4Bitmap: [1 << 16]uint32{}}
+		bm.setBitmapBit(wgIP)
+		b.ResetTimer()
+		for i := 0; i < b.N; i++ {
+			bm.checkBitmapBit(wgIP)
+		}
+	})
+
+	b.Run("WG_Last", func(b *testing.B) {
+		bm := &localIPManager{ipv4Bitmap: [1 << 16]uint32{}}
+		// Fill with other IPs first
+		for i := 0; i < 15; i++ {
+			bm.setBitmapBit(net.IPv4(10, 0, byte(i>>8), byte(i)))
+		}
+		bm.setBitmapBit(wgIP) // Add WG IP last
+		b.ResetTimer()
+		for i := 0; i < b.N; i++ {
+			bm.checkBitmapBit(wgIP)
+		}
+	})
+}
diff --git a/client/firewall/uspfilter/uspfilter.go b/client/firewall/uspfilter/uspfilter.go
index ba7b2e8b5..99035c4a3 100644
--- a/client/firewall/uspfilter/uspfilter.go
+++ b/client/firewall/uspfilter/uspfilter.go
@@ -55,8 +55,11 @@ type Manager struct {
 	routingEnabled bool
 	// indicates whether we leave forwarding and filtering to the native firewall
 	nativeRouter bool
+	// indicates whether we track outbound connections
+	stateful bool
+
+	localipmanager *localIPManager
 
-	stateful    bool
 	udpTracker  *conntrack.UDPTracker
 	icmpTracker *conntrack.ICMPTracker
 	tcpTracker  *conntrack.TCPTracker
@@ -120,15 +123,20 @@ func create(iface common.IFaceMapper) (*Manager, error) {
 				return d
 			},
 		},
-		outgoingRules: make(map[string]RuleSet),
-		incomingRules: make(map[string]RuleSet),
-		routeRules:    make(map[string]RouteRule),
-		wgIface:       iface,
-		stateful:      !disableConntrack,
+		outgoingRules:  make(map[string]RuleSet),
+		incomingRules:  make(map[string]RuleSet),
+		routeRules:     make(map[string]RouteRule),
+		wgIface:        iface,
+		localipmanager: newLocalIPManager(),
+		stateful:       !disableConntrack,
 		// TODO: support changing log level from logrus
 		logger: nblog.NewFromLogrus(log.StandardLogger()),
 	}
 
+	if err := m.localipmanager.UpdateLocalIPs(iface); err != nil {
+		return nil, fmt.Errorf("update local IPs: %w", err)
+	}
+
 	// Only initialize trackers if stateful mode is enabled
 	if disableConntrack {
 		log.Info("conntrack is disabled")
@@ -346,9 +354,9 @@ func (m *Manager) DropIncoming(packetData []byte) bool {
 	return m.dropFilter(packetData, m.incomingRules)
 }
 
-func (m *Manager) isLocalIP(ip net.IP) bool {
-	// TODO: add other interface IPs and keep track of them
-	return ip.Equal(m.wgIface.Address().IP)
+// UpdateLocalIPs updates the list of local IPs
+func (m *Manager) UpdateLocalIPs() error {
+	return m.localipmanager.UpdateLocalIPs(m.wgIface)
 }
 
 func (m *Manager) processOutgoingHooks(packetData []byte) bool {
@@ -496,7 +504,7 @@ func (m *Manager) dropFilter(packetData []byte, rules map[string]RuleSet) bool {
 	}
 
 	// Handle local traffic - apply peer ACLs
-	if m.isLocalIP(dstIP) {
+	if m.localipmanager.IsLocalIP(dstIP) {
 		drop := m.applyRules(srcIP, packetData, rules, d)
 		if drop {
 			m.logger.Trace("Dropping local packet: src=%s dst=%s rules=denied",
diff --git a/client/internal/engine.go b/client/internal/engine.go
index 042d384dc..584d41195 100644
--- a/client/internal/engine.go
+++ b/client/internal/engine.go
@@ -40,13 +40,13 @@ import (
 	"github.com/netbirdio/netbird/client/internal/routemanager"
 	"github.com/netbirdio/netbird/client/internal/routemanager/systemops"
 	"github.com/netbirdio/netbird/client/internal/statemanager"
+	"github.com/netbirdio/netbird/management/domain"
 	semaphoregroup "github.com/netbirdio/netbird/util/semaphore-group"
 
 	nbssh "github.com/netbirdio/netbird/client/ssh"
 	"github.com/netbirdio/netbird/client/system"
 	nbdns "github.com/netbirdio/netbird/dns"
 	mgm "github.com/netbirdio/netbird/management/client"
-	"github.com/netbirdio/netbird/management/domain"
 	mgmProto "github.com/netbirdio/netbird/management/proto"
 	auth "github.com/netbirdio/netbird/relay/auth/hmac"
 	relayClient "github.com/netbirdio/netbird/relay/client"
@@ -186,6 +186,10 @@ type Peer struct {
 	WgAllowedIps string
 }
 
+type localIpUpdater interface {
+	UpdateLocalIPs() error
+}
+
 // NewEngine creates a new Connection Engine
 func NewEngine(
 	clientCtx context.Context,
@@ -802,6 +806,14 @@ func (e *Engine) updateNetworkMap(networkMap *mgmProto.NetworkMap) error {
 		e.acl.ApplyFiltering(networkMap)
 	}
 
+	if e.firewall != nil {
+		if localipfw, ok := e.firewall.(localIpUpdater); ok {
+			if err := localipfw.UpdateLocalIPs(); err != nil {
+				log.Errorf("failed to update local IPs: %v", err)
+			}
+		}
+	}
+
 	// DNS forwarder
 	dnsRouteFeatureFlag := toDNSFeatureFlag(networkMap)
 	dnsRouteDomains := toRouteDomains(e.config.WgPrivateKey.PublicKey().String(), networkMap.GetRoutes())