diff --git a/compiler/packages/babel-plugin-react-compiler/src/HIR/Environment.ts b/compiler/packages/babel-plugin-react-compiler/src/HIR/Environment.ts
index 4ec4a4a795f1b..bdbfb20a59ac1 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/HIR/Environment.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/HIR/Environment.ts
@@ -83,21 +83,11 @@ export type ExternalFunction = z.infer<typeof ExternalFunctionSchema>;
 export const USE_FIRE_FUNCTION_NAME = 'useFire';
 export const EMIT_FREEZE_GLOBAL_GATING = '__DEV__';
 
-export const MacroMethodSchema = z.union([
-  z.object({type: z.literal('wildcard')}),
-  z.object({type: z.literal('name'), name: z.string()}),
-]);
-
-// Would like to change this to drop the string option, but breaks compatibility with existing configs
-export const MacroSchema = z.union([
-  z.string(),
-  z.tuple([z.string(), z.array(MacroMethodSchema)]),
-]);
+export const MacroSchema = z.string();
 
 export type CompilerMode = 'all_features' | 'no_inferred_memo';
 
 export type Macro = z.infer<typeof MacroSchema>;
-export type MacroMethod = z.infer<typeof MacroMethodSchema>;
 
 const HookSchema = z.object({
   /*
diff --git a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MemoizeFbtAndMacroOperandsInSameScope.ts b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MemoizeFbtAndMacroOperandsInSameScope.ts
index 4ae9978b589f7..0ce05a823e9b0 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MemoizeFbtAndMacroOperandsInSameScope.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/MemoizeFbtAndMacroOperandsInSameScope.ts
@@ -7,7 +7,6 @@
 
 import {
   HIRFunction,
-  Identifier,
   IdentifierId,
   InstructionValue,
   makeInstructionId,
@@ -15,9 +14,35 @@ import {
   Place,
   ReactiveScope,
 } from '../HIR';
-import {Macro, MacroMethod} from '../HIR/Environment';
+import {Macro} from '../HIR/Environment';
 import {eachInstructionValueOperand} from '../HIR/visitors';
-import {Iterable_some} from '../Utils/utils';
+
+/**
+ * Whether a macro requires its arguments to be transitively inlined (eg fbt)
+ * or just avoid having the top-level values be converted to variables (eg fbt.param)
+ */
+enum InlineLevel {
+  Transitive = 'Transitive',
+  Shallow = 'Shallow',
+}
+type MacroDefinition = {
+  level: InlineLevel;
+  properties: Map<string, MacroDefinition> | null;
+};
+
+const SHALLOW_MACRO: MacroDefinition = {
+  level: InlineLevel.Shallow,
+  properties: null,
+};
+const TRANSITIVE_MACRO: MacroDefinition = {
+  level: InlineLevel.Transitive,
+  properties: null,
+};
+const FBT_MACRO: MacroDefinition = {
+  level: InlineLevel.Transitive,
+  properties: new Map([['*', SHALLOW_MACRO]]),
+};
+FBT_MACRO.properties!.set('enum', FBT_MACRO);
 
 /**
  * This pass supports the `fbt` translation system (https://facebook.github.io/fbt/)
@@ -42,250 +67,210 @@ import {Iterable_some} from '../Utils/utils';
  * ## User-defined macro-like function
  *
  * Users can also specify their own functions to be treated similarly to fbt via the
- * `customMacros` environment configuration.
+ * `customMacros` environment configuration. By default, user-supplied custom macros
+ * have their arguments transitively inlined.
  */
 export function memoizeFbtAndMacroOperandsInSameScope(
   fn: HIRFunction,
 ): Set<IdentifierId> {
-  const fbtMacroTags = new Set<Macro>([
-    ...Array.from(FBT_TAGS).map((tag): Macro => [tag, []]),
-    ...(fn.env.config.customMacros ?? []),
+  const macroKinds = new Map<Macro, MacroDefinition>([
+    ...Array.from(FBT_TAGS.entries()),
+    ...(fn.env.config.customMacros ?? []).map(
+      name => [name, TRANSITIVE_MACRO] as [Macro, MacroDefinition],
+    ),
   ]);
   /**
-   * Set of all identifiers that load fbt or other macro functions or their nested
-   * properties, as well as values known to be the results of invoking macros
+   * Forward data-flow analysis to identify all macro tags, including
+   * things like `fbt.foo.bar(...)`
    */
-  const macroTagsCalls: Set<IdentifierId> = new Set();
+  const macroTags = populateMacroTags(fn, macroKinds);
+
   /**
-   * Mapping of lvalue => list of operands for all expressions where either
-   * the lvalue is a known fbt/macro call and/or the operands transitively
-   * contain fbt/macro calls.
-   *
-   * This is the key data structure that powers the scope merging: we start
-   * at the lvalues and merge operands into the lvalue's scope.
+   * Reverse data-flow analysis to merge arguments to macro *invocations*
+   * based on the kind of the macro
    */
-  const macroValues: Map<Identifier, Array<Identifier>> = new Map();
-  // Tracks methods loaded from macros, like fbt.param or idx.foo
-  const macroMethods = new Map<IdentifierId, Array<Array<MacroMethod>>>();
-
-  visit(fn, fbtMacroTags, macroTagsCalls, macroMethods, macroValues);
-
-  for (const root of macroValues.keys()) {
-    const scope = root.scope;
-    if (scope == null) {
-      continue;
-    }
-    // Merge the operands into the same scope if this is a known macro invocation
-    if (!macroTagsCalls.has(root.id)) {
-      continue;
-    }
-    mergeScopes(root, scope, macroValues, macroTagsCalls);
-  }
+  const macroValues = mergeMacroArguments(fn, macroTags, macroKinds);
 
-  return macroTagsCalls;
+  return macroValues;
 }
 
-export const FBT_TAGS: Set<string> = new Set([
-  'fbt',
-  'fbt:param',
-  'fbt:enum',
-  'fbt:plural',
-  'fbs',
-  'fbs:param',
-  'fbs:enum',
-  'fbs:plural',
+const FBT_TAGS: Map<string, MacroDefinition> = new Map([
+  ['fbt', FBT_MACRO],
+  ['fbt:param', SHALLOW_MACRO],
+  ['fbt:enum', FBT_MACRO],
+  ['fbt:plural', SHALLOW_MACRO],
+  ['fbs', FBT_MACRO],
+  ['fbs:param', SHALLOW_MACRO],
+  ['fbs:enum', FBT_MACRO],
+  ['fbs:plural', SHALLOW_MACRO],
 ]);
 export const SINGLE_CHILD_FBT_TAGS: Set<string> = new Set([
   'fbt:param',
   'fbs:param',
 ]);
 
-function visit(
+function populateMacroTags(
   fn: HIRFunction,
-  fbtMacroTags: Set<Macro>,
-  macroTagsCalls: Set<IdentifierId>,
-  macroMethods: Map<IdentifierId, Array<Array<MacroMethod>>>,
-  macroValues: Map<Identifier, Array<Identifier>>,
-): void {
-  for (const [, block] of fn.body.blocks) {
-    for (const phi of block.phis) {
-      const macroOperands: Array<Identifier> = [];
-      for (const operand of phi.operands.values()) {
-        if (macroValues.has(operand.identifier)) {
-          macroOperands.push(operand.identifier);
-        }
-      }
-      if (macroOperands.length !== 0) {
-        macroValues.set(phi.place.identifier, macroOperands);
-      }
-    }
-    for (const instruction of block.instructions) {
-      const {lvalue, value} = instruction;
-      if (lvalue === null) {
-        continue;
-      }
-      if (
-        value.kind === 'Primitive' &&
-        typeof value.value === 'string' &&
-        matchesExactTag(value.value, fbtMacroTags)
-      ) {
-        /*
-         * We don't distinguish between tag names and strings, so record
-         * all `fbt` string literals in case they are used as a jsx tag.
-         */
-        macroTagsCalls.add(lvalue.identifier.id);
-      } else if (
-        value.kind === 'LoadGlobal' &&
-        matchesExactTag(value.binding.name, fbtMacroTags)
-      ) {
-        // Record references to `fbt` as a global
-        macroTagsCalls.add(lvalue.identifier.id);
-      } else if (
-        value.kind === 'LoadGlobal' &&
-        matchTagRoot(value.binding.name, fbtMacroTags) !== null
-      ) {
-        const methods = matchTagRoot(value.binding.name, fbtMacroTags)!;
-        macroMethods.set(lvalue.identifier.id, methods);
-      } else if (
-        value.kind === 'PropertyLoad' &&
-        macroMethods.has(value.object.identifier.id)
-      ) {
-        const methods = macroMethods.get(value.object.identifier.id)!;
-        const newMethods = [];
-        for (const method of methods) {
-          if (
-            method.length > 0 &&
-            (method[0].type === 'wildcard' ||
-              (method[0].type === 'name' && method[0].name === value.property))
-          ) {
-            if (method.length > 1) {
-              newMethods.push(method.slice(1));
-            } else {
-              macroTagsCalls.add(lvalue.identifier.id);
+  macroKinds: Map<Macro, MacroDefinition>,
+): Map<IdentifierId, MacroDefinition> {
+  const macroTags = new Map<IdentifierId, MacroDefinition>();
+  for (const block of fn.body.blocks.values()) {
+    for (const instr of block.instructions) {
+      const {lvalue, value} = instr;
+      switch (value.kind) {
+        case 'Primitive': {
+          if (typeof value.value === 'string') {
+            const macroDefinition = macroKinds.get(value.value);
+            if (macroDefinition != null) {
+              /*
+               * We don't distinguish between tag names and strings, so record
+               * all `fbt` string literals in case they are used as a jsx tag.
+               */
+              macroTags.set(lvalue.identifier.id, macroDefinition);
             }
           }
+          break;
         }
-        if (newMethods.length > 0) {
-          macroMethods.set(lvalue.identifier.id, newMethods);
+        case 'LoadGlobal': {
+          let macroDefinition = macroKinds.get(value.binding.name);
+          if (macroDefinition != null) {
+            macroTags.set(lvalue.identifier.id, macroDefinition);
+          }
+          break;
         }
-      } else if (
-        value.kind === 'PropertyLoad' &&
-        macroTagsCalls.has(value.object.identifier.id)
-      ) {
-        macroTagsCalls.add(lvalue.identifier.id);
-      } else if (
-        isFbtJsxExpression(fbtMacroTags, macroTagsCalls, value) ||
-        isFbtJsxChild(macroTagsCalls, lvalue, value) ||
-        isFbtCallExpression(macroTagsCalls, value)
-      ) {
-        macroTagsCalls.add(lvalue.identifier.id);
-        macroValues.set(
-          lvalue.identifier,
-          Array.from(
-            eachInstructionValueOperand(value),
-            operand => operand.identifier,
-          ),
-        );
-      } else if (
-        Iterable_some(eachInstructionValueOperand(value), operand =>
-          macroValues.has(operand.identifier),
-        )
-      ) {
-        const macroOperands: Array<Identifier> = [];
-        for (const operand of eachInstructionValueOperand(value)) {
-          if (macroValues.has(operand.identifier)) {
-            macroOperands.push(operand.identifier);
+        case 'PropertyLoad': {
+          if (typeof value.property === 'string') {
+            const macroDefinition = macroTags.get(value.object.identifier.id);
+            if (macroDefinition != null) {
+              const propertyDefinition =
+                macroDefinition.properties != null
+                  ? (macroDefinition.properties.get(value.property) ??
+                    macroDefinition.properties.get('*'))
+                  : null;
+              const propertyMacro = propertyDefinition ?? macroDefinition;
+              macroTags.set(lvalue.identifier.id, propertyMacro);
+            }
           }
+          break;
         }
-        macroValues.set(lvalue.identifier, macroOperands);
       }
     }
   }
+  return macroTags;
 }
 
-function mergeScopes(
-  root: Identifier,
-  scope: ReactiveScope,
-  macroValues: Map<Identifier, Array<Identifier>>,
-  macroTagsCalls: Set<IdentifierId>,
-): void {
-  const operands = macroValues.get(root);
-  if (operands == null) {
-    return;
-  }
-  for (const operand of operands) {
-    operand.scope = scope;
-    expandFbtScopeRange(scope.range, operand.mutableRange);
-    macroTagsCalls.add(operand.id);
-    mergeScopes(operand, scope, macroValues, macroTagsCalls);
-  }
-}
-
-function matchesExactTag(s: string, tags: Set<Macro>): boolean {
-  return Array.from(tags).some(macro =>
-    typeof macro === 'string'
-      ? s === macro
-      : macro[1].length === 0 && macro[0] === s,
-  );
-}
-
-function matchTagRoot(
-  s: string,
-  tags: Set<Macro>,
-): Array<Array<MacroMethod>> | null {
-  const methods: Array<Array<MacroMethod>> = [];
-  for (const macro of tags) {
-    if (typeof macro === 'string') {
-      continue;
+function mergeMacroArguments(
+  fn: HIRFunction,
+  macroTags: Map<IdentifierId, MacroDefinition>,
+  macroKinds: Map<Macro, MacroDefinition>,
+): Set<IdentifierId> {
+  const macroValues = new Set<IdentifierId>(macroTags.keys());
+  for (const block of Array.from(fn.body.blocks.values()).reverse()) {
+    for (let i = block.instructions.length - 1; i >= 0; i--) {
+      const instr = block.instructions[i]!;
+      const {lvalue, value} = instr;
+      switch (value.kind) {
+        case 'DeclareContext':
+        case 'DeclareLocal':
+        case 'Destructure':
+        case 'LoadContext':
+        case 'LoadLocal':
+        case 'PostfixUpdate':
+        case 'PrefixUpdate':
+        case 'StoreContext':
+        case 'StoreLocal': {
+          // Instructions that never need to be merged
+          break;
+        }
+        case 'CallExpression':
+        case 'MethodCall': {
+          const scope = lvalue.identifier.scope;
+          if (scope == null) {
+            continue;
+          }
+          const callee =
+            value.kind === 'CallExpression' ? value.callee : value.property;
+          const macroDefinition =
+            macroTags.get(callee.identifier.id) ??
+            macroTags.get(lvalue.identifier.id);
+          if (macroDefinition != null) {
+            visitOperands(
+              macroDefinition,
+              scope,
+              lvalue,
+              value,
+              macroValues,
+              macroTags,
+            );
+          }
+          break;
+        }
+        case 'JsxExpression': {
+          const scope = lvalue.identifier.scope;
+          if (scope == null) {
+            continue;
+          }
+          let macroDefinition;
+          if (value.tag.kind === 'Identifier') {
+            macroDefinition = macroTags.get(value.tag.identifier.id);
+          } else {
+            macroDefinition = macroKinds.get(value.tag.name);
+          }
+          macroDefinition ??= macroTags.get(lvalue.identifier.id);
+          if (macroDefinition != null) {
+            visitOperands(
+              macroDefinition,
+              scope,
+              lvalue,
+              value,
+              macroValues,
+              macroTags,
+            );
+          }
+          break;
+        }
+        default: {
+          const scope = lvalue.identifier.scope;
+          if (scope == null) {
+            continue;
+          }
+          const macroDefinition = macroTags.get(lvalue.identifier.id);
+          if (macroDefinition != null) {
+            visitOperands(
+              macroDefinition,
+              scope,
+              lvalue,
+              value,
+              macroValues,
+              macroTags,
+            );
+          }
+          break;
+        }
+      }
     }
-    const [tag, rest] = macro;
-    if (tag === s && rest.length > 0) {
-      methods.push(rest);
+    for (const phi of block.phis) {
+      const scope = phi.place.identifier.scope;
+      if (scope == null) {
+        continue;
+      }
+      const macroDefinition = macroTags.get(phi.place.identifier.id);
+      if (
+        macroDefinition == null ||
+        macroDefinition.level === InlineLevel.Shallow
+      ) {
+        continue;
+      }
+      macroValues.add(phi.place.identifier.id);
+      for (const operand of phi.operands.values()) {
+        operand.identifier.scope = scope;
+        expandFbtScopeRange(scope.range, operand.identifier.mutableRange);
+        macroTags.set(operand.identifier.id, macroDefinition);
+        macroValues.add(operand.identifier.id);
+      }
     }
   }
-  if (methods.length > 0) {
-    return methods;
-  } else {
-    return null;
-  }
-}
-
-function isFbtCallExpression(
-  macroTagsCalls: Set<IdentifierId>,
-  value: InstructionValue,
-): boolean {
-  return (
-    (value.kind === 'CallExpression' &&
-      macroTagsCalls.has(value.callee.identifier.id)) ||
-    (value.kind === 'MethodCall' &&
-      macroTagsCalls.has(value.property.identifier.id))
-  );
-}
-
-function isFbtJsxExpression(
-  fbtMacroTags: Set<Macro>,
-  macroTagsCalls: Set<IdentifierId>,
-  value: InstructionValue,
-): boolean {
-  return (
-    value.kind === 'JsxExpression' &&
-    ((value.tag.kind === 'Identifier' &&
-      macroTagsCalls.has(value.tag.identifier.id)) ||
-      (value.tag.kind === 'BuiltinTag' &&
-        matchesExactTag(value.tag.name, fbtMacroTags)))
-  );
-}
-
-function isFbtJsxChild(
-  macroTagsCalls: Set<IdentifierId>,
-  lvalue: Place | null,
-  value: InstructionValue,
-): boolean {
-  return (
-    (value.kind === 'JsxExpression' || value.kind === 'JsxFragment') &&
-    lvalue !== null &&
-    macroTagsCalls.has(lvalue.identifier.id)
-  );
+  return macroValues;
 }
 
 function expandFbtScopeRange(
@@ -298,3 +283,22 @@ function expandFbtScopeRange(
     );
   }
 }
+
+function visitOperands(
+  macroDefinition: MacroDefinition,
+  scope: ReactiveScope,
+  lvalue: Place,
+  value: InstructionValue,
+  macroValues: Set<IdentifierId>,
+  macroTags: Map<IdentifierId, MacroDefinition>,
+): void {
+  macroValues.add(lvalue.identifier.id);
+  for (const operand of eachInstructionValueOperand(value)) {
+    if (macroDefinition.level === InlineLevel.Transitive) {
+      operand.identifier.scope = scope;
+      expandFbtScopeRange(scope.range, operand.identifier.mutableRange);
+      macroTags.set(operand.identifier.id, macroDefinition);
+    }
+    macroValues.add(operand.identifier.id);
+  }
+}
diff --git a/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts b/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts
index e84c1e57aae60..a574ecc16525e 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts
@@ -135,16 +135,7 @@ function parseConfigPragmaEnvironmentForTest(
     } else if (val) {
       const parsedVal = tryParseTestPragmaValue(val).unwrap();
       if (key === 'customMacros' && typeof parsedVal === 'string') {
-        const valSplit = parsedVal.split('.');
-        const props = [];
-        for (const elt of valSplit.slice(1)) {
-          if (elt === '*') {
-            props.push({type: 'wildcard'});
-          } else if (elt.length > 0) {
-            props.push({type: 'name', name: elt});
-          }
-        }
-        maybeConfig[key] = [[valSplit[0], props]];
+        maybeConfig[key] = [parsedVal.split('.')[0]];
         continue;
       }
       maybeConfig[key] = parsedVal;
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-leading-whitespace.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-leading-whitespace.expect.md
index ac9bc2ce28a9a..96cea12a6231d 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-leading-whitespace.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-leading-whitespace.expect.md
@@ -44,15 +44,23 @@ import fbt from "fbt";
 import { identity } from "shared-runtime";
 
 function Component(props) {
-  const $ = _c(3);
+  const $ = _c(5);
   let t0;
   if ($[0] !== props.count || $[1] !== props.option) {
+    let t1;
+    if ($[3] !== props.count) {
+      t1 = identity(props.count);
+      $[3] = props.count;
+      $[4] = t1;
+    } else {
+      t1 = $[4];
+    }
     t0 = (
       <span>
         {fbt._(
           { "*": "{count} votes for {option}", _1: "1 vote for {option}" },
           [
-            fbt._plural(identity(props.count), "count"),
+            fbt._plural(t1, "count"),
             fbt._param(
               "option",
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-trailing-whitespace.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-trailing-whitespace.expect.md
index 9b4c29607d9e3..e5f465df169eb 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-trailing-whitespace.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-param-with-trailing-whitespace.expect.md
@@ -44,15 +44,23 @@ import fbt from "fbt";
 import { identity } from "shared-runtime";
 
 function Component(props) {
-  const $ = _c(3);
+  const $ = _c(5);
   let t0;
   if ($[0] !== props.count || $[1] !== props.option) {
+    let t1;
+    if ($[3] !== props.count) {
+      t1 = identity(props.count);
+      $[3] = props.count;
+      $[4] = t1;
+    } else {
+      t1 = $[4];
+    }
     t0 = (
       <span>
         {fbt._(
           { "*": "{count} votes for {option}", _1: "1 vote for {option}" },
           [
-            fbt._plural(identity(props.count), "count"),
+            fbt._plural(t1, "count"),
             fbt._param(
               "option",
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-preserve-whitespace-two-subtrees.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-preserve-whitespace-two-subtrees.expect.md
index c1a1a5891b368..c421ccbe81021 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-preserve-whitespace-two-subtrees.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbt-preserve-whitespace-two-subtrees.expect.md
@@ -37,7 +37,7 @@ import { c as _c } from "react/compiler-runtime";
 import fbt from "fbt";
 
 function Foo(t0) {
-  const $ = _c(7);
+  const $ = _c(13);
   const { name1, name2 } = t0;
   let t1;
   if ($[0] !== name1 || $[1] !== name2) {
@@ -50,19 +50,34 @@ function Foo(t0) {
       t2 = $[4];
     }
     let t3;
-    if ($[5] !== name2) {
-      t3 = <b>{name2}</b>;
-      $[5] = name2;
-      $[6] = t3;
+    if ($[5] !== name1 || $[6] !== t2) {
+      t3 = <span key={name1}>{t2}</span>;
+      $[5] = name1;
+      $[6] = t2;
+      $[7] = t3;
     } else {
-      t3 = $[6];
+      t3 = $[7];
+    }
+    let t4;
+    if ($[8] !== name2) {
+      t4 = <b>{name2}</b>;
+      $[8] = name2;
+      $[9] = t4;
+    } else {
+      t4 = $[9];
+    }
+    let t5;
+    if ($[10] !== name2 || $[11] !== t4) {
+      t5 = <span key={name2}>{t4}</span>;
+      $[10] = name2;
+      $[11] = t4;
+      $[12] = t5;
+    } else {
+      t5 = $[12];
     }
     t1 = fbt._(
       "{user1} and {user2} accepted your PR!",
-      [
-        fbt._param("user1", <span key={name1}>{t2}</span>),
-        fbt._param("user2", <span key={name2}>{t3}</span>),
-      ],
+      [fbt._param("user1", t3), fbt._param("user2", t5)],
       { hk: "2PxMie" },
     );
     $[0] = name1;
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-element-content.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-element-content.expect.md
index 56ffb70cb0aeb..66141f7f8d788 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-element-content.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-element-content.expect.md
@@ -29,20 +29,24 @@ import { c as _c } from "react/compiler-runtime";
 import fbt from "fbt";
 
 function Component(t0) {
-  const $ = _c(4);
+  const $ = _c(6);
   const { name, data, icon } = t0;
   let t1;
   if ($[0] !== data || $[1] !== icon || $[2] !== name) {
+    let t2;
+    if ($[4] !== name) {
+      t2 = <Text type="h4">{name}</Text>;
+      $[4] = name;
+      $[5] = t2;
+    } else {
+      t2 = $[5];
+    }
     t1 = (
       <Text type="body4">
         {fbt._(
           "{item author}{icon}{=m2}",
           [
-            fbt._param(
-              "item author",
-
-              <Text type="h4">{name}</Text>,
-            ),
+            fbt._param("item author", t2),
             fbt._param(
               "icon",
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-fragment-value.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-fragment-value.expect.md
index 0ed51660b985e..c9a43bb075e88 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-fragment-value.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/fbtparam-with-jsx-fragment-value.expect.md
@@ -27,16 +27,21 @@ import fbt from "fbt";
 import { identity } from "shared-runtime";
 
 function Component(props) {
-  const $ = _c(2);
+  const $ = _c(4);
   let t0;
   if ($[0] !== props.text) {
+    const t1 = identity(props.text);
+    let t2;
+    if ($[2] !== t1) {
+      t2 = <>{t1}</>;
+      $[2] = t1;
+      $[3] = t2;
+    } else {
+      t2 = $[3];
+    }
     t0 = (
       <Foo
-        value={fbt._(
-          "{value}%",
-          [fbt._param("value", <>{identity(props.text)}</>)],
-          { hk: "10F5Cc" },
-        )}
+        value={fbt._("{value}%", [fbt._param("value", t2)], { hk: "10F5Cc" })}
       />
     );
     $[0] = props.text;
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/recursively-merge-scopes-jsx.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/recursively-merge-scopes-jsx.expect.md
new file mode 100644
index 0000000000000..93a9b869f670d
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/recursively-merge-scopes-jsx.expect.md
@@ -0,0 +1,109 @@
+
+## Input
+
+```javascript
+// @flow
+import {fbt} from 'fbt';
+
+function Example({x}) {
+  // "Inner Text" needs to be visible to fbt: the <Bar> element cannot
+  // be memoized separately
+  return (
+    <fbt desc="Description">
+      Outer Text
+      <Foo key="b" x={x}>
+        <Bar key="a">Inner Text</Bar>
+      </Foo>
+    </fbt>
+  );
+}
+
+function Foo({x, children}) {
+  'use no memo';
+  return (
+    <>
+      <div>{x}</div>
+      <span>{children}</span>
+    </>
+  );
+}
+
+function Bar({children}) {
+  'use no memo';
+  return children;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Example,
+  params: [{x: 'Hello'}],
+};
+
+```
+
+## Code
+
+```javascript
+import { c as _c } from "react/compiler-runtime";
+import { fbt } from "fbt";
+
+function Example(t0) {
+  const $ = _c(2);
+  const { x } = t0;
+  let t1;
+  if ($[0] !== x) {
+    t1 = fbt._(
+      "Outer Text {=m1}",
+      [
+        fbt._implicitParam(
+          "=m1",
+
+          <Foo key="b" x={x}>
+            {fbt._(
+              "{=m1}",
+              [
+                fbt._implicitParam(
+                  "=m1",
+                  <Bar key="a">
+                    {fbt._("Inner Text", null, { hk: "32YB0l" })}
+                  </Bar>,
+                ),
+              ],
+              { hk: "23dJsI" },
+            )}
+          </Foo>,
+        ),
+      ],
+      { hk: "2RVA7V" },
+    );
+    $[0] = x;
+    $[1] = t1;
+  } else {
+    t1 = $[1];
+  }
+  return t1;
+}
+
+function Foo({ x, children }) {
+  "use no memo";
+  return (
+    <>
+      <div>{x}</div>
+      <span>{children}</span>
+    </>
+  );
+}
+
+function Bar({ children }) {
+  "use no memo";
+  return children;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Example,
+  params: [{ x: "Hello" }],
+};
+
+```
+      
+### Eval output
+(kind: ok) Outer Text <div>Hello</div><span>Inner Text</span>
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/recursively-merge-scopes-jsx.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/recursively-merge-scopes-jsx.js
new file mode 100644
index 0000000000000..f89289fb039f3
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/recursively-merge-scopes-jsx.js
@@ -0,0 +1,35 @@
+// @flow
+import {fbt} from 'fbt';
+
+function Example({x}) {
+  // "Inner Text" needs to be visible to fbt: the <Bar> element cannot
+  // be memoized separately
+  return (
+    <fbt desc="Description">
+      Outer Text
+      <Foo key="b" x={x}>
+        <Bar key="a">Inner Text</Bar>
+      </Foo>
+    </fbt>
+  );
+}
+
+function Foo({x, children}) {
+  'use no memo';
+  return (
+    <>
+      <div>{x}</div>
+      <span>{children}</span>
+    </>
+  );
+}
+
+function Bar({children}) {
+  'use no memo';
+  return children;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Example,
+  params: [{x: 'Hello'}],
+};
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt-jsx.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt-jsx.expect.md
new file mode 100644
index 0000000000000..10a2a9ae131e9
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt-jsx.expect.md
@@ -0,0 +1,128 @@
+
+## Input
+
+```javascript
+import fbt from 'fbt';
+import {Stringify, identity} from 'shared-runtime';
+
+/**
+ * MemoizeFbtAndMacroOperands needs to account for nested fbt calls.
+ * Expected fixture `fbt-param-call-arguments` to succeed but it failed with error:
+ *   /fbt-param-call-arguments.ts: Line 19 Column 11: fbt: unsupported babel node: Identifier
+ *   ---
+ *   t3
+ *   ---
+ */
+function Component({firstname, lastname}) {
+  'use memo';
+  return (
+    <div>
+      {fbt(
+        [
+          'Name: ',
+          fbt.param('firstname', <Stringify key={0} name={firstname} />),
+          ', ',
+          fbt.param(
+            'lastname',
+            identity(
+              fbt(
+                '(inner)' +
+                  fbt.param('lastname', <Stringify key={1} name={lastname} />),
+                'Inner fbt value'
+              )
+            )
+          ),
+        ],
+        'Name'
+      )}
+    </div>
+  );
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [{firstname: 'first', lastname: 'last'}],
+  sequentialRenders: [{firstname: 'first', lastname: 'last'}],
+};
+
+```
+
+## Code
+
+```javascript
+import { c as _c } from "react/compiler-runtime";
+import fbt from "fbt";
+import { Stringify, identity } from "shared-runtime";
+
+/**
+ * MemoizeFbtAndMacroOperands needs to account for nested fbt calls.
+ * Expected fixture `fbt-param-call-arguments` to succeed but it failed with error:
+ *   /fbt-param-call-arguments.ts: Line 19 Column 11: fbt: unsupported babel node: Identifier
+ *   ---
+ *   t3
+ *   ---
+ */
+function Component(t0) {
+  "use memo";
+  const $ = _c(9);
+  const { firstname, lastname } = t0;
+  let t1;
+  if ($[0] !== firstname || $[1] !== lastname) {
+    let t2;
+    if ($[3] !== firstname) {
+      t2 = <Stringify key={0} name={firstname} />;
+      $[3] = firstname;
+      $[4] = t2;
+    } else {
+      t2 = $[4];
+    }
+    let t3;
+    if ($[5] !== lastname) {
+      t3 = <Stringify key={1} name={lastname} />;
+      $[5] = lastname;
+      $[6] = t3;
+    } else {
+      t3 = $[6];
+    }
+    t1 = fbt._(
+      "Name: {firstname}, {lastname}",
+      [
+        fbt._param("firstname", t2),
+        fbt._param(
+          "lastname",
+          identity(
+            fbt._("(inner){lastname}", [fbt._param("lastname", t3)], {
+              hk: "1Kdxyo",
+            }),
+          ),
+        ),
+      ],
+      { hk: "3AiIf8" },
+    );
+    $[0] = firstname;
+    $[1] = lastname;
+    $[2] = t1;
+  } else {
+    t1 = $[2];
+  }
+  let t2;
+  if ($[7] !== t1) {
+    t2 = <div>{t1}</div>;
+    $[7] = t1;
+    $[8] = t2;
+  } else {
+    t2 = $[8];
+  }
+  return t2;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [{ firstname: "first", lastname: "last" }],
+  sequentialRenders: [{ firstname: "first", lastname: "last" }],
+};
+
+```
+      
+### Eval output
+(kind: ok) <div>Name: <div>{"name":"first"}</div>, (inner)<div>{"name":"last"}</div></div>
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt-jsx.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt-jsx.js
new file mode 100644
index 0000000000000..07efb4e03a842
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt-jsx.js
@@ -0,0 +1,42 @@
+import fbt from 'fbt';
+import {Stringify, identity} from 'shared-runtime';
+
+/**
+ * MemoizeFbtAndMacroOperands needs to account for nested fbt calls.
+ * Expected fixture `fbt-param-call-arguments` to succeed but it failed with error:
+ *   /fbt-param-call-arguments.ts: Line 19 Column 11: fbt: unsupported babel node: Identifier
+ *   ---
+ *   t3
+ *   ---
+ */
+function Component({firstname, lastname}) {
+  'use memo';
+  return (
+    <div>
+      {fbt(
+        [
+          'Name: ',
+          fbt.param('firstname', <Stringify key={0} name={firstname} />),
+          ', ',
+          fbt.param(
+            'lastname',
+            identity(
+              fbt(
+                '(inner)' +
+                  fbt.param('lastname', <Stringify key={1} name={lastname} />),
+                'Inner fbt value'
+              )
+            )
+          ),
+        ],
+        'Name'
+      )}
+    </div>
+  );
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [{firstname: 'first', lastname: 'last'}],
+  sequentialRenders: [{firstname: 'first', lastname: 'last'}],
+};
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.expect.md
index 5ad089e1341bc..063e45e04e352 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.expect.md
@@ -3,7 +3,7 @@
 
 ```javascript
 import fbt from 'fbt';
-import {Stringify} from 'shared-runtime';
+import {identity} from 'shared-runtime';
 
 /**
  * MemoizeFbtAndMacroOperands needs to account for nested fbt calls.
@@ -16,22 +16,25 @@ import {Stringify} from 'shared-runtime';
 function Component({firstname, lastname}) {
   'use memo';
   return (
-    <Stringify>
+    <div>
       {fbt(
         [
           'Name: ',
-          fbt.param('firstname', <Stringify key={0} name={firstname} />),
+          fbt.param('firstname', identity(firstname)),
           ', ',
           fbt.param(
             'lastname',
-            <Stringify key={0} name={lastname}>
-              {fbt('(inner fbt)', 'Inner fbt value')}
-            </Stringify>
+            identity(
+              fbt(
+                '(inner)' + fbt.param('lastname', identity(lastname)),
+                'Inner fbt value'
+              )
+            )
           ),
         ],
         'Name'
       )}
-    </Stringify>
+    </div>
   );
 }
 
@@ -48,7 +51,7 @@ export const FIXTURE_ENTRYPOINT = {
 ```javascript
 import { c as _c } from "react/compiler-runtime";
 import fbt from "fbt";
-import { Stringify } from "shared-runtime";
+import { identity } from "shared-runtime";
 
 /**
  * MemoizeFbtAndMacroOperands needs to account for nested fbt calls.
@@ -70,14 +73,24 @@ function Component(t0) {
         fbt._param(
           "firstname",
 
-          <Stringify key={0} name={firstname} />,
+          identity(firstname),
         ),
         fbt._param(
           "lastname",
 
-          <Stringify key={0} name={lastname}>
-            {fbt._("(inner fbt)", null, { hk: "36qNwF" })}
-          </Stringify>,
+          identity(
+            fbt._(
+              "(inner){lastname}",
+              [
+                fbt._param(
+                  "lastname",
+
+                  identity(lastname),
+                ),
+              ],
+              { hk: "1Kdxyo" },
+            ),
+          ),
         ),
       ],
       { hk: "3AiIf8" },
@@ -90,7 +103,7 @@ function Component(t0) {
   }
   let t2;
   if ($[3] !== t1) {
-    t2 = <Stringify>{t1}</Stringify>;
+    t2 = <div>{t1}</div>;
     $[3] = t1;
     $[4] = t2;
   } else {
@@ -108,4 +121,4 @@ export const FIXTURE_ENTRYPOINT = {
 ```
       
 ### Eval output
-(kind: ok) <div>{"children":"Name: , "}</div>
\ No newline at end of file
+(kind: ok) <div>Name: first, (inner)last</div>
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.js
index 14e3278e395de..38465a628045b 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.js
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/fbt/repro-fbt-param-nested-fbt.js
@@ -1,5 +1,5 @@
 import fbt from 'fbt';
-import {Stringify} from 'shared-runtime';
+import {identity} from 'shared-runtime';
 
 /**
  * MemoizeFbtAndMacroOperands needs to account for nested fbt calls.
@@ -12,22 +12,25 @@ import {Stringify} from 'shared-runtime';
 function Component({firstname, lastname}) {
   'use memo';
   return (
-    <Stringify>
+    <div>
       {fbt(
         [
           'Name: ',
-          fbt.param('firstname', <Stringify key={0} name={firstname} />),
+          fbt.param('firstname', identity(firstname)),
           ', ',
           fbt.param(
             'lastname',
-            <Stringify key={0} name={lastname}>
-              {fbt('(inner fbt)', 'Inner fbt value')}
-            </Stringify>
+            identity(
+              fbt(
+                '(inner)' + fbt.param('lastname', identity(lastname)),
+                'Inner fbt value'
+              )
+            )
           ),
         ],
         'Name'
       )}
-    </Stringify>
+    </div>
   );
 }
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining-wildcard.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining-wildcard.expect.md
index 455c416d840e8..e004ef246abf6 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining-wildcard.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining-wildcard.expect.md
@@ -37,7 +37,7 @@ function Component(props) {
   const $ = _c(16);
   let t0;
   if ($[0] !== props) {
-    t0 = idx(props, _temp);
+    t0 = idx(props, (_) => _.group.label);
     $[0] = props;
     $[1] = t0;
   } else {
@@ -46,7 +46,7 @@ function Component(props) {
   const groupName1 = t0;
   let t1;
   if ($[2] !== props) {
-    t1 = idx.a(props, _temp2);
+    t1 = idx.a(props, (__0) => __0.group.label);
     $[2] = props;
     $[3] = t1;
   } else {
@@ -108,12 +108,6 @@ function Component(props) {
   }
   return t5;
 }
-function _temp2(__0) {
-  return __0.group.label;
-}
-function _temp(_) {
-  return _.group.label;
-}
 
 ```
       
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining.expect.md
index cc5a4200a94be..e98fb191ce73a 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/idx-method-no-outlining.expect.md
@@ -31,7 +31,7 @@ function Component(props) {
   const $ = _c(10);
   let t0;
   if ($[0] !== props) {
-    t0 = idx(props, _temp);
+    t0 = idx(props, (_) => _.group.label);
     $[0] = props;
     $[1] = t0;
   } else {
@@ -74,9 +74,6 @@ function Component(props) {
   }
   return t3;
 }
-function _temp(_) {
-  return _.group.label;
-}
 
 ```
       
\ No newline at end of file