diff --git a/esphome/components/text_sensor/filter.cpp b/esphome/components/text_sensor/filter.cpp
index 4cace372ae..4ee12e8602 100644
--- a/esphome/components/text_sensor/filter.cpp
+++ b/esphome/components/text_sensor/filter.cpp
@@ -9,19 +9,18 @@ namespace text_sensor {
 static const char *const TAG = "text_sensor.filter";
 
 // Filter
-void Filter::input(const std::string &value) {
+void Filter::input(std::string value) {
   ESP_LOGVV(TAG, "Filter(%p)::input(%s)", this, value.c_str());
-  optional<std::string> out = this->new_value(value);
-  if (out.has_value())
-    this->output(*out);
+  if (this->new_value(value))
+    this->output(value);
 }
-void Filter::output(const std::string &value) {
+void Filter::output(std::string &value) {
   if (this->next_ == nullptr) {
     ESP_LOGVV(TAG, "Filter(%p)::output(%s) -> SENSOR", this, value.c_str());
     this->parent_->internal_send_state_to_frontend(value);
   } else {
     ESP_LOGVV(TAG, "Filter(%p)::output(%s) -> %p", this, value.c_str(), this->next_);
-    this->next_->input(value);
+    this->next_->input(std::move(value));
   }
 }
 void Filter::initialize(TextSensor *parent, Filter *next) {
@@ -35,43 +34,48 @@ LambdaFilter::LambdaFilter(lambda_filter_t lambda_filter) : lambda_filter_(std::
 const lambda_filter_t &LambdaFilter::get_lambda_filter() const { return this->lambda_filter_; }
 void LambdaFilter::set_lambda_filter(const lambda_filter_t &lambda_filter) { this->lambda_filter_ = lambda_filter; }
 
-optional<std::string> LambdaFilter::new_value(std::string value) {
-  auto it = this->lambda_filter_(value);
-  ESP_LOGVV(TAG, "LambdaFilter(%p)::new_value(%s) -> %s", this, value.c_str(), it.value_or("").c_str());
-  return it;
+bool LambdaFilter::new_value(std::string &value) {
+  auto result = this->lambda_filter_(value);
+  if (result.has_value()) {
+    ESP_LOGVV(TAG, "LambdaFilter(%p)::new_value(%s) -> %s (continue)", this, value.c_str(), result->c_str());
+    value = std::move(*result);
+    return true;
+  }
+  ESP_LOGVV(TAG, "LambdaFilter(%p)::new_value(%s) -> (stop)", this, value.c_str());
+  return false;
 }
 
 // ToUpperFilter
-optional<std::string> ToUpperFilter::new_value(std::string value) {
+bool ToUpperFilter::new_value(std::string &value) {
   for (char &c : value)
     c = ::toupper(c);
-  return value;
+  return true;
 }
 
 // ToLowerFilter
-optional<std::string> ToLowerFilter::new_value(std::string value) {
+bool ToLowerFilter::new_value(std::string &value) {
   for (char &c : value)
     c = ::tolower(c);
-  return value;
+  return true;
 }
 
 // Append
-optional<std::string> AppendFilter::new_value(std::string value) {
+bool AppendFilter::new_value(std::string &value) {
   value.append(this->suffix_);
-  return value;
+  return true;
 }
 
 // Prepend
-optional<std::string> PrependFilter::new_value(std::string value) {
+bool PrependFilter::new_value(std::string &value) {
   value.insert(0, this->prefix_);
-  return value;
+  return true;
 }
 
 // Substitute
 SubstituteFilter::SubstituteFilter(const std::initializer_list<Substitution> &substitutions)
     : substitutions_(substitutions) {}
 
-optional<std::string> SubstituteFilter::new_value(std::string value) {
+bool SubstituteFilter::new_value(std::string &value) {
   for (const auto &sub : this->substitutions_) {
     // Compute lengths once per substitution (strlen is fast, called infrequently)
     const size_t from_len = strlen(sub.from);
@@ -84,20 +88,20 @@ optional<std::string> SubstituteFilter::new_value(std::string value) {
       pos += to_len;
     }
   }
-  return value;
+  return true;
 }
 
 // Map
 MapFilter::MapFilter(const std::initializer_list<Substitution> &mappings) : mappings_(mappings) {}
 
-optional<std::string> MapFilter::new_value(std::string value) {
+bool MapFilter::new_value(std::string &value) {
   for (const auto &mapping : this->mappings_) {
     if (value == mapping.from) {
       value.assign(mapping.to);
-      return value;
+      return true;
     }
   }
-  return value;  // Pass through if no match
+  return true;  // Pass through if no match
 }
 
 }  // namespace text_sensor
diff --git a/esphome/components/text_sensor/filter.h b/esphome/components/text_sensor/filter.h
index 0f66b753b4..1922b503ca 100644
--- a/esphome/components/text_sensor/filter.h
+++ b/esphome/components/text_sensor/filter.h
@@ -17,21 +17,20 @@ class Filter {
  public:
   /** This will be called every time the filter receives a new value.
    *
-   * It can return an empty optional to indicate that the filter chain
-   * should stop, otherwise the value in the filter will be passed down
-   * the chain.
+   * Modify the value in place. Return false to stop the filter chain
+   * (value will not be published), or true to continue.
    *
-   * @param value The new value.
-   * @return An optional string, the new value that should be pushed out.
+   * @param value The value to filter (modified in place).
+   * @return True to continue the filter chain, false to stop.
    */
-  virtual optional<std::string> new_value(std::string value) = 0;
+  virtual bool new_value(std::string &value) = 0;
 
   /// Initialize this filter, please note this can be called more than once.
   virtual void initialize(TextSensor *parent, Filter *next);
 
-  void input(const std::string &value);
+  void input(std::string value);
 
-  void output(const std::string &value);
+  void output(std::string &value);
 
  protected:
   friend TextSensor;
@@ -45,15 +44,14 @@ using lambda_filter_t = std::function<optional<std::string>(std::string)>;
 /** This class allows for creation of simple template filters.
  *
  * The constructor accepts a lambda of the form std::string -> optional<std::string>.
- * It will be called with each new value in the filter chain and returns the modified
- * value that shall be passed down the filter chain. Returning an empty Optional
- * means that the value shall be discarded.
+ * Return a modified string to continue the chain, or return {} to stop
+ * (value will not be published).
  */
 class LambdaFilter : public Filter {
  public:
   explicit LambdaFilter(lambda_filter_t lambda_filter);
 
-  optional<std::string> new_value(std::string value) override;
+  bool new_value(std::string &value) override;
 
   const lambda_filter_t &get_lambda_filter() const;
   void set_lambda_filter(const lambda_filter_t &lambda_filter);
@@ -71,7 +69,14 @@ class StatelessLambdaFilter : public Filter {
  public:
   explicit StatelessLambdaFilter(optional<std::string> (*lambda_filter)(std::string)) : lambda_filter_(lambda_filter) {}
 
-  optional<std::string> new_value(std::string value) override { return this->lambda_filter_(value); }
+  bool new_value(std::string &value) override {
+    auto result = this->lambda_filter_(value);
+    if (result.has_value()) {
+      value = std::move(*result);
+      return true;
+    }
+    return false;
+  }
 
  protected:
   optional<std::string> (*lambda_filter_)(std::string);
@@ -80,20 +85,20 @@ class StatelessLambdaFilter : public Filter {
 /// A simple filter that converts all text to uppercase
 class ToUpperFilter : public Filter {
  public:
-  optional<std::string> new_value(std::string value) override;
+  bool new_value(std::string &value) override;
 };
 
 /// A simple filter that converts all text to lowercase
 class ToLowerFilter : public Filter {
  public:
-  optional<std::string> new_value(std::string value) override;
+  bool new_value(std::string &value) override;
 };
 
 /// A simple filter that adds a string to the end of another string
 class AppendFilter : public Filter {
  public:
   explicit AppendFilter(const char *suffix) : suffix_(suffix) {}
-  optional<std::string> new_value(std::string value) override;
+  bool new_value(std::string &value) override;
 
  protected:
   const char *suffix_;
@@ -103,7 +108,7 @@ class AppendFilter : public Filter {
 class PrependFilter : public Filter {
  public:
   explicit PrependFilter(const char *prefix) : prefix_(prefix) {}
-  optional<std::string> new_value(std::string value) override;
+  bool new_value(std::string &value) override;
 
  protected:
   const char *prefix_;
@@ -118,7 +123,7 @@ struct Substitution {
 class SubstituteFilter : public Filter {
  public:
   explicit SubstituteFilter(const std::initializer_list<Substitution> &substitutions);
-  optional<std::string> new_value(std::string value) override;
+  bool new_value(std::string &value) override;
 
  protected:
   FixedVector<Substitution> substitutions_;
@@ -151,7 +156,7 @@ class SubstituteFilter : public Filter {
 class MapFilter : public Filter {
  public:
   explicit MapFilter(const std::initializer_list<Substitution> &mappings);
-  optional<std::string> new_value(std::string value) override;
+  bool new_value(std::string &value) override;
 
  protected:
   FixedVector<Substitution> mappings_;