In implementations of text wrap modification using variable inset, a display screen of a device displays lines of text wrapped to an inset space maintained between an object boundary and the lines of text. The device implements a text wrap modification module to determine that a penalty value associated with a line of text is reduced if the line of text is extended to include one or more words from a subsequent line of text, determine that the one or more words fit within an additional space for the line of text based on a variable overlap of the line of text into the inset space, and display the one or more words from the line of text as extended to include the one or more words from the subsequent line of text.