diff --git a/runtime/lua/vim/text.lua b/runtime/lua/vim/text.lua
index ba038bacf8..3bdb058e30 100644
--- a/runtime/lua/vim/text.lua
+++ b/runtime/lua/vim/text.lua
@@ -190,7 +190,7 @@ function M.indent(size, text, opts)
   old_indent = old_indent or 0
   prefix = prefix and prefix or ' '
 
-  if old_indent == size then
+  if not opts.expandtab and old_indent == size then
     -- Optimization: if the indent is the same, return the text unchanged.
     return text, old_indent
   end
diff --git a/test/functional/lua/text_spec.lua b/test/functional/lua/text_spec.lua
index a4a41dc862..9e80f81bc5 100644
--- a/test/functional/lua/text_spec.lua
+++ b/test/functional/lua/text_spec.lua
@@ -47,6 +47,8 @@ describe('vim.text', function()
         { ' \n  \nfoo\n\nbar\nbaz\n    \n', 1 },
         { vim.text.indent(0, '  \n   \n foo\n\n bar\n baz\n     \n') }
       )
+      -- Tabs expand when old indent matches new indent #40932.
+      eq({ '  a', 2 }, { vim.text.indent(2, '\t a', { expandtab = 1 }) })
     end)
 
     it('real-world cases', function()