Issue with Sub Folder Permission Inheritance Not Breaking Properly

When using the Share button on a folder in SharePoint Online, the permissions granted will automatically propagate to all files and subfolders within that folder.

To prevent this behavior:

Go to Manage Access for the folder. Click on Advanced Settings.

While granting permissions, make sure to uncheck the option:
"Share everything in this folder, even items with unique permissions."

This ensures that items with unique permissions inside the folder remain unaffected by the new sharing action.

-------------------------------------------------

If you found this helpful, kindly consider marking it as the accepted answer.