diff --git a/prism_compile.c b/prism_compile.c
index 1027a2c062..848a5d4ecd 100644
--- a/prism_compile.c
+++ b/prism_compile.c
@@ -8385,7 +8385,30 @@ pm_parse_process_error(const pm_parse_result_t *result)
         // over as the only argument that gets raised. This is to allow priority
         // messages that should be handled before anything else.
         if (error->level == PM_ERROR_LEVEL_ARGUMENT) {
-            return rb_exc_new(rb_eArgError, error->message, strlen(error->message));
+            int32_t line_number = (int32_t) pm_location_line_number(parser, &error->location);
+
+            pm_buffer_append_format(
+                &buffer,
+                "%.*s:%" PRIi32 ": %s",
+                (int) pm_string_length(filepath),
+                pm_string_source(filepath),
+                line_number,
+                error->message
+            );
+
+            if (pm_parse_process_error_utf8_p(parser, &error->location)) {
+                pm_buffer_append_byte(&buffer, '\n');
+
+                pm_list_node_t *list_node = (pm_list_node_t *) error;
+                pm_list_t error_list = { .size = 1, .head = list_node, .tail = list_node };
+
+                pm_parser_errors_format(parser, &error_list, &buffer, rb_stderr_tty_p(), false);
+            }
+
+            VALUE arg_error = rb_exc_new(rb_eArgError, pm_buffer_value(&buffer), pm_buffer_length(&buffer));
+            pm_buffer_free(&buffer);
+
+            return arg_error;
         }
 
         // It is implicitly assumed that the error messages will be encodeable
diff --git a/test/.excludes-prism/TestParse.rb b/test/.excludes-prism/TestParse.rb
index 87694ac15a..d832970d76 100644
--- a/test/.excludes-prism/TestParse.rb
+++ b/test/.excludes-prism/TestParse.rb
@@ -1,5 +1,4 @@
 exclude(:test_assign_in_conditional, "missing warning")
-exclude(:test_magic_comment, "incorrect encoding")
 exclude(:test_shareable_constant_value_nested, "ractor support")
 exclude(:test_shareable_constant_value_nonliteral, "ractor support")
 exclude(:test_shareable_constant_value_simple, "ractor support")
diff --git a/test/ruby/test_parse.rb b/test/ruby/test_parse.rb
index 62498170fd..e365c39def 100644
--- a/test/ruby/test_parse.rb
+++ b/test/ruby/test_parse.rb
@@ -803,14 +803,20 @@ x = __ENCODING__
 # coding: foo
       END
     end
-    assert_include(e.message, "# coding: foo\n          ^~~")
+
+    message = e.message.gsub(/\033\[.*?m/, "")
+    assert_include(message, "# coding: foo\n")
+    assert_include(message, "          ^")
 
     e = assert_raise(ArgumentError) do
       eval <<-END, nil, __FILE__, __LINE__+1
 # coding = foo
       END
     end
-    assert_include(e.message, "# coding = foo\n           ^~~")
+
+    message = e.message.gsub(/\033\[.*?m/, "")
+    assert_include(message, "# coding = foo\n")
+    assert_include(message, "           ^")
   end
 
   def test_utf8_bom