@Composable fun Outer(i: Int, onClick: () -> Unit) {
        @Composable fun Capturing() {
            Text(i.toString())
        }
        Capturing()
        Button(onClick = onClick) {
            Text("me " + i)
        }
    }

    override fun onCreate(savedInstanceState: Bundle?) {
        super.onCreate(savedInstanceState)
        setContent {
            Column {
                var i by state { 0 }
                Outer(i, {
                    i += 1
                })
            }
        }

it seems nested functions can be defined but they are not working properly,

Capturing

is considered not depending on any parameters, so it will not update when recompose

Please file it as a bug, b.android.com