diff --git a/CHANGELOG.md b/CHANGELOG.md
index 126be3d6..2d4c1341 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -17,6 +17,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Fixed goto not being recognised for LuaJIT ([#986](https://github.com/JohnnyMorganz/StyLua/issues/986))
 - Fixed semicolon removed after a statement ending with an if-expression leading to ambiguous syntax when the next line begins with parentheses ([#1010](https://github.com/JohnnyMorganz/StyLua/issues/1010))
 - Luau: Fixed malformed formatting when there is a comment after a type specifier in a local assignment ([#995](https://github.com/JohnnyMorganz/StyLua/issues/995))
+- Luau: Fixed long type union formatted onto a single line if there is a comment in between the equals sign and the type union in a type declaration ([#1007](https://github.com/JohnnyMorganz/StyLua/issues/1007))
 
 ## [2.1.0] - 2025-04-21
 
diff --git a/src/formatters/luau.rs b/src/formatters/luau.rs
index dc56f133..7a6c560f 100644
--- a/src/formatters/luau.rs
+++ b/src/formatters/luau.rs
@@ -1101,7 +1101,12 @@ fn attempt_assigned_type_tactics(
         let declaration = if contains_comments(strip_trivia(type_info)) {
             hang_type_info(ctx, type_info, TypeInfoContext::new(), shape, 0)
         } else {
-            format_type_info(ctx, type_info, shape)
+            let proper_declaration = format_type_info(ctx, type_info, shape);
+            if shape.test_over_budget(&proper_declaration) {
+                hang_type_info(ctx, type_info, TypeInfoContext::new(), shape, 0)
+            } else {
+                proper_declaration
+            }
         };
 
         // Take the leading comments and format them nicely
diff --git a/tests/inputs-luau/type-hanging-4.lua b/tests/inputs-luau/type-hanging-4.lua
new file mode 100644
index 00000000..99993e27
--- /dev/null
+++ b/tests/inputs-luau/type-hanging-4.lua
@@ -0,0 +1,41 @@
+export type ThemeKey = -- NOTE: Luau will introduce keyof in the new type solver! replace this when available
+	| "fontFace"
+	| "monoFontFace"
+	| "accent"
+	| "background"
+	| "foreground"
+	| "windowBackground"
+	| "windowBorder"
+	| "windowTitleBackground"
+	| "windowTitleForeground"
+	| "windowShadow"
+	| "windowButtonMinimize"
+	| "windowButtonMaximize"
+	| "windowButtonClose"
+	| "appBackground"
+	| "appForeground"
+	| "buttonBackground"
+	| "buttonForeground"
+	| "buttonHoverBackground"
+	| "buttonHoverForeground"
+	| "buttonPressedBackground"
+	| "buttonPressedForeground"
+	| "buttonDisabledBackground"
+	| "buttonDisabledForeground"
+	| "inputBackground"
+	| "inputForeground"
+	| "inputPlaceholder"
+	| "inputBorder"
+	| "selectionBackground"
+	| "selectionForeground"
+	| "scrollbarBackground"
+	| "scrollbarThumb"
+	| "menuBackground"
+	| "menuForeground"
+	| "menuHighlight"
+	| "notificationBackground"
+	| "notificationForeground"
+	| "error"
+	| "warning"
+	| "success"
+	| "info"
diff --git a/tests/snapshots/tests__luau@type-hanging-4.lua.snap b/tests/snapshots/tests__luau@type-hanging-4.lua.snap
new file mode 100644
index 00000000..99c4e086
--- /dev/null
+++ b/tests/snapshots/tests__luau@type-hanging-4.lua.snap
@@ -0,0 +1,46 @@
+---
+source: tests/tests.rs
+expression: "format(&contents, LuaVersion::Luau)"
+input_file: tests/inputs-luau/type-hanging-4.lua
+---
+export type ThemeKey = -- NOTE: Luau will introduce keyof in the new type solver! replace this when available
+	| "fontFace"
+	| "monoFontFace"
+	| "accent"
+	| "background"
+	| "foreground"
+	| "windowBackground"
+	| "windowBorder"
+	| "windowTitleBackground"
+	| "windowTitleForeground"
+	| "windowShadow"
+	| "windowButtonMinimize"
+	| "windowButtonMaximize"
+	| "windowButtonClose"
+	| "appBackground"
+	| "appForeground"
+	| "buttonBackground"
+	| "buttonForeground"
+	| "buttonHoverBackground"
+	| "buttonHoverForeground"
+	| "buttonPressedBackground"
+	| "buttonPressedForeground"
+	| "buttonDisabledBackground"
+	| "buttonDisabledForeground"
+	| "inputBackground"
+	| "inputForeground"
+	| "inputPlaceholder"
+	| "inputBorder"
+	| "selectionBackground"
+	| "selectionForeground"
+	| "scrollbarBackground"
+	| "scrollbarThumb"
+	| "menuBackground"
+	| "menuForeground"
+	| "menuHighlight"
+	| "notificationBackground"
+	| "notificationForeground"
+	| "error"
+	| "warning"
+	| "success"
+	| "info"