diff --git a/CHANGELOG.md b/CHANGELOG.md
index 6a318ada61b..12056bf8ac6 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -11,10 +11,12 @@
 ### Under the hood
 - Bump artifact schema versions for 1.0.0: manifest v4, run results v4, sources v3. Notable changes: schema test + data test nodes are renamed to generic test + singular test nodes; freshness threshold default values ([#4191](https://github.com/dbt-labs/dbt-core/pull/4191))
 - Speed up node selection by skipping `incorporate_indirect_nodes` if not needed ([#4213](https://github.com/dbt-labs/dbt-core/issues/4213), [#4214](https://github.com/dbt-labs/dbt-core/issues/4214))
+- When on_schema_change is set, pass common columns as dest_columns in incremental merge macros ([#4144](https://github.com/dbt-labs/dbt-core/issues/4144), [#4170](https://github.com/dbt-labs/dbt-core/pull/4170))
 
 Contributors:
 - [@kadero](https://github.com/kadero) ([3955](https://github.com/dbt-labs/dbt-core/pull/3955))
 - [@frankcash](https://github.com/frankcash) ([4136](https://github.com/dbt-labs/dbt-core/pull/4136))
+- [@Kayrnt](https://github.com/Kayrnt) ([4136](https://github.com/dbt-labs/dbt-core/pull/4170))
 
 ## dbt-core 1.0.0b2 (October 25, 2021)
 
diff --git a/core/dbt/include/global_project/macros/materializations/incremental/incremental.sql b/core/dbt/include/global_project/macros/materializations/incremental/incremental.sql
index ccdfbfad39b..07dd1e1b07b 100644
--- a/core/dbt/include/global_project/macros/materializations/incremental/incremental.sql
+++ b/core/dbt/include/global_project/macros/materializations/incremental/incremental.sql
@@ -53,8 +53,12 @@
     {% do adapter.expand_target_column_types(
              from_relation=tmp_relation,
              to_relation=target_relation) %}
-    {% do process_schema_changes(on_schema_change, tmp_relation, existing_relation) %}
-    {% set build_sql = incremental_upsert(tmp_relation, target_relation, unique_key=unique_key) %}
+    {#-- Process schema changes. Returns dict of changes if successful. Use source columns for upserting/merging --#}
+    {% set dest_columns = process_schema_changes(on_schema_change, tmp_relation, existing_relation) %}
+    {% if not dest_columns %}
+      {% set dest_columns = adapter.get_columns_in_relation(existing_relation) %}
+    {% endif %}
+    {% set build_sql = get_delete_insert_merge_sql(target_relation, tmp_relation, unique_key, dest_columns) %}
   
   {% endif %}
 
diff --git a/core/dbt/include/global_project/macros/materializations/incremental/on_schema_change.sql b/core/dbt/include/global_project/macros/materializations/incremental/on_schema_change.sql
index c346f726f22..4367ad80eb1 100644
--- a/core/dbt/include/global_project/macros/materializations/incremental/on_schema_change.sql
+++ b/core/dbt/include/global_project/macros/materializations/incremental/on_schema_change.sql
@@ -57,7 +57,7 @@
   {%- set target_columns = adapter.get_columns_in_relation(target_relation) -%}
   {%- set source_not_in_target = diff_columns(source_columns, target_columns) -%}
   {%- set target_not_in_source = diff_columns(target_columns, source_columns) -%}
-  
+
   {% set new_target_types = diff_column_data_types(source_columns, target_columns) %}
 
   {% if source_not_in_target != [] %}
@@ -72,6 +72,8 @@
     'schema_changed': schema_changed,
     'source_not_in_target': source_not_in_target,
     'target_not_in_source': target_not_in_source,
+    'source_columns': source_columns,
+    'target_columns': target_columns,
     'new_target_types': new_target_types
   } %}
 
@@ -132,7 +134,11 @@
 
 {% macro process_schema_changes(on_schema_change, source_relation, target_relation) %}
     
-    {% if on_schema_change != 'ignore' %}
+    {% if on_schema_change == 'ignore' %}
+
+     {{ return({}) }}
+
+    {% else %}
     
       {% set schema_changes_dict = check_for_schema_changes(source_relation, target_relation) %}
       
@@ -158,6 +164,8 @@
         {% endif %}
       
       {% endif %}
+
+      {{ return(schema_changes_dict['source_columns']) }}
     
     {% endif %}
 
diff --git a/test/integration/070_incremental_schema_tests/models/incremental_append_new_columns_remove_one.sql b/test/integration/070_incremental_schema_tests/models/incremental_append_new_columns_remove_one.sql
new file mode 100644
index 00000000000..dbb4962a7e5
--- /dev/null
+++ b/test/integration/070_incremental_schema_tests/models/incremental_append_new_columns_remove_one.sql
@@ -0,0 +1,28 @@
+{{
+    config(
+        materialized='incremental',
+        unique_key='id',
+        on_schema_change='append_new_columns'
+    )
+}}
+
+{% set string_type = 'varchar(10)' %}
+
+WITH source_data AS (SELECT * FROM {{ ref('model_a') }} )
+
+{% if is_incremental()  %}
+
+SELECT id, 
+       cast(field1 as {{string_type}}) as field1,
+       cast(field3 as {{string_type}}) as field3, 
+       cast(field4 as {{string_type}}) as field4 
+FROM source_data WHERE id NOT IN (SELECT id from {{ this }} )
+
+{% else %}
+
+SELECT id, 
+       cast(field1 as {{string_type}}) as field1, 
+       cast(field2 as {{string_type}}) as field2 
+FROM source_data where id <= 3
+
+{% endif %}
\ No newline at end of file
diff --git a/test/integration/070_incremental_schema_tests/models/incremental_append_new_columns_remove_one_target.sql b/test/integration/070_incremental_schema_tests/models/incremental_append_new_columns_remove_one_target.sql
new file mode 100644
index 00000000000..f3a279f0285
--- /dev/null
+++ b/test/integration/070_incremental_schema_tests/models/incremental_append_new_columns_remove_one_target.sql
@@ -0,0 +1,19 @@
+{{ 
+    config(materialized='table') 
+}}
+
+{% set string_type = 'varchar(10)' %}
+
+with source_data as (
+
+    select * from {{ ref('model_a') }}
+
+)
+
+select id,
+       cast(field1 as {{string_type}}) as field1,
+       cast(CASE WHEN id >  3 THEN NULL ELSE field2 END as {{string_type}}) AS field2,
+       cast(CASE WHEN id <= 3 THEN NULL ELSE field3 END as {{string_type}}) AS field3,
+       cast(CASE WHEN id <= 3 THEN NULL ELSE field4 END as {{string_type}}) AS field4
+
+from source_data
\ No newline at end of file
diff --git a/test/integration/070_incremental_schema_tests/test_incremental_schema.py b/test/integration/070_incremental_schema_tests/test_incremental_schema.py
index 3de7d6e7bdc..09a494b8952 100644
--- a/test/integration/070_incremental_schema_tests/test_incremental_schema.py
+++ b/test/integration/070_incremental_schema_tests/test_incremental_schema.py
@@ -44,6 +44,12 @@ def run_incremental_append_new_columns(self):
         compare_source = 'incremental_append_new_columns'
         compare_target = 'incremental_append_new_columns_target'
         self.run_twice_and_assert(select, compare_source, compare_target)
+        
+    def run_incremental_append_new_columns_remove_one(self):
+        select = 'model_a incremental_append_new_columns_remove_one incremental_append_new_columns_remove_one_target'
+        compare_source = 'incremental_append_new_columns_remove_one'
+        compare_target = 'incremental_append_new_columns_remove_one_target'
+        self.run_twice_and_assert(select, compare_source, compare_target)
 
     def run_incremental_sync_all_columns(self):
         select = 'model_a incremental_sync_all_columns incremental_sync_all_columns_target'
@@ -70,6 +76,7 @@ def test__postgres__run_incremental_ignore(self):
     @use_profile('postgres')
     def test__postgres__run_incremental_append_new_columns(self):
         self.run_incremental_append_new_columns()
+        self.run_incremental_append_new_columns_remove_one()
 
     @use_profile('postgres')
     def test__postgres__run_incremental_sync_all_columns(self):