diff --git a/libyul/backends/evm/EVMCodeTransform.cpp b/libyul/backends/evm/EVMCodeTransform.cpp
index e4ba54b2a..d5530c52a 100644
--- a/libyul/backends/evm/EVMCodeTransform.cpp
+++ b/libyul/backends/evm/EVMCodeTransform.cpp
@@ -182,16 +182,24 @@ void CodeTransform::operator()(VariableDeclaration const& _varDecl)
 			else
 				m_variablesScheduledForDeletion.insert(&var);
 		}
-		else if (m_unusedStackSlots.empty())
-			atTopOfStack = false;
 		else
 		{
-			auto slot = static_cast<size_t>(*m_unusedStackSlots.begin());
-			m_unusedStackSlots.erase(m_unusedStackSlots.begin());
-			m_context->variableStackHeights[&var] = slot;
-			if (size_t heightDiff = variableHeightDiff(var, varName, true))
-				m_assembly.appendInstruction(evmasm::swapInstruction(static_cast<unsigned>(heightDiff - 1)));
-			m_assembly.appendInstruction(evmasm::Instruction::POP);
+			bool foundUnusedSlot = false;
+			for (auto it = m_unusedStackSlots.begin(); it != m_unusedStackSlots.end(); ++it)
+			{
+				if (m_assembly.stackHeight() - *it > 17)
+					continue;
+				foundUnusedSlot = true;
+				auto slot = static_cast<size_t>(*it);
+				m_unusedStackSlots.erase(it);
+				m_context->variableStackHeights[&var] = slot;
+				if (size_t heightDiff = variableHeightDiff(var, varName, true))
+					m_assembly.appendInstruction(evmasm::swapInstruction(static_cast<unsigned>(heightDiff - 1)));
+				m_assembly.appendInstruction(evmasm::Instruction::POP);
+				break;
+			}
+			if (!foundUnusedSlot)
+				atTopOfStack = false;
 		}
 	}
 }
@@ -404,7 +412,7 @@ void CodeTransform::operator()(FunctionDefinition const& _function)
 				subTransform.deleteVariable(var);
 		}
 
-	if (!m_allowStackOpt || _function.returnVariables.empty())
+	if (!m_allowStackOpt)
 		subTransform.setupReturnVariablesAndFunctionExit();
 
 	subTransform(_function.body);
@@ -594,6 +602,7 @@ void CodeTransform::visitExpression(Expression const& _expression)
 
 void CodeTransform::setupReturnVariablesAndFunctionExit()
 {
+	yulAssert(isInsideFunction(), "");
 	yulAssert(!returnVariablesAndFunctionExitAreSetup(), "");
 	yulAssert(m_scope, "");
 
@@ -656,7 +665,8 @@ void CodeTransform::visitStatements(vector<Statement> const& _statements)
 	{
 		freeUnusedVariables();
 		if (
-			!m_delayedReturnVariables.empty() &&
+			isInsideFunction() &&
+			!returnVariablesAndFunctionExitAreSetup() &&
 			statementNeedsReturnVariableSetup(statement, m_delayedReturnVariables)
 		)
 			setupReturnVariablesAndFunctionExit();
diff --git a/libyul/backends/evm/EVMCodeTransform.h b/libyul/backends/evm/EVMCodeTransform.h
index a76638850..894a6d077 100644
--- a/libyul/backends/evm/EVMCodeTransform.h
+++ b/libyul/backends/evm/EVMCodeTransform.h
@@ -181,6 +181,10 @@ private:
 	{
 		return m_functionExitStackHeight.has_value();
 	}
+	bool isInsideFunction() const
+	{
+		return m_functionExitLabel.has_value();
+	}
 
 	AbstractAssembly& m_assembly;
 	AsmAnalysisInfo& m_info;
diff --git a/test/libyul/evmCodeTransform/stackReuse/function_argument_reuse_without_retparams.yul b/test/libyul/evmCodeTransform/stackReuse/function_argument_reuse_without_retparams.yul
new file mode 100644
index 000000000..d1f6b5bdc
--- /dev/null
+++ b/test/libyul/evmCodeTransform/stackReuse/function_argument_reuse_without_retparams.yul
@@ -0,0 +1,29 @@
+{
+  function f(x, y) {
+    mstore(0x80, x)
+    if calldataload(0) { sstore(y, y) }
+  }
+}
+// ====
+// stackOptimization: true
+// ----
+// PUSH1 0x17
+// JUMP
+// JUMPDEST
+// DUP1
+// PUSH1 0x80
+// MSTORE
+// POP
+// PUSH1 0x0
+// CALLDATALOAD
+// ISZERO
+// PUSH1 0x13
+// JUMPI
+// DUP1
+// DUP2
+// SSTORE
+// JUMPDEST
+// POP
+// JUMPDEST
+// JUMP
+// JUMPDEST