diff --git a/runtime/lua/vim/snippet.lua b/runtime/lua/vim/snippet.lua
index 8e384e0f97..8340ec790f 100644
--- a/runtime/lua/vim/snippet.lua
+++ b/runtime/lua/vim/snippet.lua
@@ -453,7 +453,7 @@ function M.expand(input)
     local snippet_lines = text_to_lines(snippet_text)
     -- Get the base indentation based on the current line and the last line of the snippet.
     if #snippet_lines > 0 then
-      base_indent = base_indent .. (snippet_lines[#snippet_lines]:match('(^%s*)%S') or '') --- @type string
+      base_indent = base_indent .. (snippet_lines[#snippet_lines]:match('(^%s+)%S') or '') --- @type string
     end
 
     local shiftwidth = vim.fn.shiftwidth()
diff --git a/test/functional/lua/snippet_spec.lua b/test/functional/lua/snippet_spec.lua
index 413aa93994..ba1e2db682 100644
--- a/test/functional/lua/snippet_spec.lua
+++ b/test/functional/lua/snippet_spec.lua
@@ -61,7 +61,13 @@ describe('vim.snippet', function()
   end)
 
   it('adds indentation based on the start of snippet lines', function()
+    local curbuf = api.nvim_get_current_buf()
+
     test_expand_success({ 'if $1 then', '  $0', 'end' }, { 'if  then', '  ', 'end' })
+
+    -- Regression test: #29658
+    api.nvim_buf_set_lines(curbuf, 0, -1, false, {})
+    test_expand_success({ '${1:foo^bar}\n' }, { 'foo^bar', '' })
   end)
 
   it('replaces tabs with spaces when expandtab is set', function()