diff --git a/src/languages/transactsql/transactsql.keywords.ts b/src/languages/transactsql/transactsql.keywords.ts
index 9bedf6cc0..f24d7967d 100644
--- a/src/languages/transactsql/transactsql.keywords.ts
+++ b/src/languages/transactsql/transactsql.keywords.ts
@@ -289,6 +289,8 @@ export const keywords: string[] = [
   'WRITE',
   'YEAR',
   'ZONE',
+  // https://learn.microsoft.com/en-us/sql/t-sql/queries/output-clause-transact-sql?view=sql-server-ver16#action
+  '$ACTION',
 ];
 
 export const dataTypes: string[] = [
diff --git a/test/transactsql.test.ts b/test/transactsql.test.ts
index 0fe818a84..e63a4a419 100644
--- a/test/transactsql.test.ts
+++ b/test/transactsql.test.ts
@@ -197,4 +197,12 @@ describe('TransactSqlFormatter', () => {
       CREATE TABLE foo (name char(65));
     `);
   });
+
+  // Issue #810
+  it('supports special $ACTION keyword', () => {
+    expect(format(`MERGE INTO tbl OUTPUT $action AS act;`)).toBe(dedent`
+      MERGE INTO
+        tbl OUTPUT $action AS act;
+    `);
+  });
 });