Why won't new terminal tabs/windows open with the same working directory?

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I want to open new Terminal tabs/windows with the same working directory as the tab I'm launching from.

In the Terminal "Preferences" on my MacBook there is a way to do this but although I have the proper settings (picture below) they aren't working

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Any ideas why this is happening? I think the issue may have to do with my /etc/bashrc file which has everything commented out. I did this previously because when I first got my current laptop the shell was glitching and the only way to way to make it work normally was to comment out that file.

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