diff --git a/.changeset/neat-dingos-clap.md b/.changeset/neat-dingos-clap.md
new file mode 100644
index 0000000000..6954c6cd40
--- /dev/null
+++ b/.changeset/neat-dingos-clap.md
@@ -0,0 +1,5 @@
+---
+'svelte': patch
+---
+
+fix: tweak invalid dollar prefix rules around function args
diff --git a/packages/svelte/src/compiler/phases/scope.js b/packages/svelte/src/compiler/phases/scope.js
index 02cd980adc..1a65ed26fc 100644
--- a/packages/svelte/src/compiler/phases/scope.js
+++ b/packages/svelte/src/compiler/phases/scope.js
@@ -73,7 +73,13 @@ export class Scope {
 			error(node, 'invalid-dollar-binding');
 		}
 
-		if (node.name.startsWith('$') && declaration_kind !== 'synthetic' && this.function_depth <= 1) {
+		if (
+			node.name.startsWith('$') &&
+			declaration_kind !== 'synthetic' &&
+			declaration_kind !== 'param' &&
+			declaration_kind !== 'rest_param' &&
+			this.function_depth <= 1
+		) {
 			error(node, 'invalid-dollar-prefix');
 		}