diff --git a/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts b/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
index f6872da1117e..62e1d2877d7e 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
@@ -2596,11 +2596,17 @@ function lowerExpression(
 
         // Store the previous value to a temporary
         const previousValuePlace = lowerValueToTemporary(builder, value);
+        const capturedPreviousValue = lowerValueToTemporary(builder, {
+          kind: 'LoadLocal',
+          place: {...previousValuePlace},
+          loc: exprLoc,
+        });
+
         // Store the new value to a temporary
         const updatedValue = lowerValueToTemporary(builder, {
           kind: 'BinaryExpression',
           operator: binaryOperator,
-          left: {...previousValuePlace},
+          left: {...capturedPreviousValue},
           right: lowerValueToTemporary(builder, {
             kind: 'Primitive',
             value: 1,
@@ -2633,7 +2639,7 @@ function lowerExpression(
           kind: 'LoadLocal',
           place: expr.node.prefix
             ? {...newValuePlace}
-            : {...previousValuePlace},
+            : {...capturedPreviousValue},
           loc: exprLoc,
         };
       }
@@ -2646,13 +2652,55 @@ function lowerExpression(
         });
         return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
       } else if (builder.isContextIdentifier(argument)) {
-        builder.errors.push({
-          reason: `(BuildHIR::lowerExpression) Handle UpdateExpression to variables captured within lambdas.`,
-          category: ErrorCategory.Todo,
-          loc: exprPath.node.loc ?? null,
-          suggestions: null,
+        const binaryOperator = expr.node.operator === '++' ? '+' : '-';
+        const lvalue = lowerIdentifierForAssignment(
+          builder,
+          argument.node.loc ?? GeneratedSource,
+          InstructionKind.Reassign,
+          argument,
+        );
+
+        if (lvalue === null) {
+          return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
+        } else if (lvalue.kind === 'Global') {
+          builder.errors.push({
+            reason: `(BuildHIR::lowerExpression) Expected Identifier to be a context variable`,
+            category: ErrorCategory.Invariant,
+            loc: exprLoc,
+            suggestions: null,
+          });
+          return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
+        }
+
+        // Load the current value
+        const previousValue = lowerExpressionToTemporary(builder, argument);
+
+        // Calculate the new value
+        const updatedValue = lowerValueToTemporary(builder, {
+          kind: 'BinaryExpression',
+          operator: binaryOperator,
+          left: {...previousValue},
+          right: lowerValueToTemporary(builder, {
+            kind: 'Primitive',
+            value: 1,
+            loc: GeneratedSource,
+          }),
+          loc: exprLoc,
         });
-        return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
+
+        // Store the new value
+        const newValuePlace = lowerValueToTemporary(builder, {
+          kind: 'StoreContext',
+          lvalue: {place: {...lvalue}, kind: InstructionKind.Reassign},
+          value: {...updatedValue},
+          loc: exprLoc,
+        });
+
+        return {
+          kind: 'LoadLocal',
+          place: expr.node.prefix ? {...newValuePlace} : {...previousValue},
+          loc: exprLoc,
+        };
       }
       const lvalue = lowerIdentifierForAssignment(
         builder,
diff --git a/split_react_35305.sh b/split_react_35305.sh
new file mode 100755
index 000000000000..961784993b78
--- /dev/null
+++ b/split_react_35305.sh
@@ -0,0 +1,45 @@
+#!/bin/bash
+set -e
+
+# React
+cd /Users/work/react_temp
+git checkout main
+git reset --hard origin/main
+gh pr checkout 35305 -R facebook/react -b feature/original-35305 --force
+git remote set-url origin https://github.com/tennisleng/react.git
+
+ORIGIN_BRANCH="feature/original-35305"
+
+# 1. Logic Branch
+echo "Creating branch: feat/react-update-expr-logic"
+git checkout main
+git checkout -b feat/react-update-expr-logic
+
+# Checkout logic file
+git checkout $ORIGIN_BRANCH -- compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
+
+# Commit
+git add .
+git commit -m "fix(compiler): Support UpdateExpression on captured variables logic"
+
+# Push
+git push origin feat/react-update-expr-logic
+gh pr create --repo facebook/react --base main --head tennisleng:feat/react-update-expr-logic --title "fix(compiler): Support UpdateExpression on captured variables logic" --body "Splitting #35305: Core logical fix."
+
+# 2. Test Branch
+echo "Creating branch: feat/react-update-expr-tests"
+git checkout feat/react-update-expr-logic
+git checkout -b feat/react-update-expr-tests
+
+# Checkout tests
+git checkout $ORIGIN_BRANCH -- compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures
+
+# Commit
+git add .
+git commit -m "test(compiler): Add regression tests for UpdateExpression"
+
+# Push
+git push origin feat/react-update-expr-tests
+gh pr create --repo facebook/react --base main --head tennisleng:feat/react-update-expr-tests --title "test(compiler): Add regression tests for UpdateExpression" --body "Splitting #35305: Test fixtures. Depends on #logic-pr"
+
+echo "Done splitting #35305"