diff --git a/.scalafmt.conf b/.scalafmt.conf
index b06f43c0c..8bfd2c774 100644
--- a/.scalafmt.conf
+++ b/.scalafmt.conf
@@ -1,4 +1,4 @@
-version = "3.0.7"
+version = "3.1.2"
 
 runner.dialect = scala213
 maxColumn = 120
diff --git a/build.sbt b/build.sbt
index 287d3c75f..44d5be0fb 100644
--- a/build.sbt
+++ b/build.sbt
@@ -147,8 +147,8 @@ lazy val tools = project
     crossScalaVersions -= scala3,
     testFrameworks := Seq(new TestFramework("zio.test.sbt.ZTestFramework")),
     libraryDependencies ++= Seq(
-      "org.scalameta"                 %% "scalafmt-dynamic"              % "3.0.7",
-      "org.scalameta"                 %% "scalafmt-core"                 % "3.0.7",
+      "org.scalameta"                 %% "scalafmt-dynamic"              % "3.1.2",
+      "org.scalameta"                 %% "scalafmt-core"                 % "3.1.2",
       "com.softwaremill.sttp.client3" %% "async-http-client-backend-zio" % sttpVersion,
       "dev.zio"                       %% "zio-config"                    % zioConfigVersion,
       "dev.zio"                       %% "zio-config-magnolia"           % zioConfigVersion,
diff --git a/tools/src/main/resources/default.scalafmt.conf b/tools/src/main/resources/default.scalafmt.conf
new file mode 100644
index 000000000..2881b7595
--- /dev/null
+++ b/tools/src/main/resources/default.scalafmt.conf
@@ -0,0 +1 @@
+version=2.7.5
\ No newline at end of file
diff --git a/tools/src/main/scala/caliban/tools/Formatter.scala b/tools/src/main/scala/caliban/tools/Formatter.scala
index 44fecee21..5acde7550 100644
--- a/tools/src/main/scala/caliban/tools/Formatter.scala
+++ b/tools/src/main/scala/caliban/tools/Formatter.scala
@@ -5,7 +5,8 @@ import org.scalafmt.interfaces.Scalafmt
 import zio.RIO
 import zio.blocking.{ effectBlocking, Blocking }
 
-import java.nio.file.{ Files, Path, Paths }
+import java.nio.file.{ Files, Path, Paths, StandardCopyOption }
+import java.util.jar.JarFile
 
 object Formatter {
 
@@ -16,7 +17,23 @@ object Formatter {
     effectBlocking {
       val config: Path = {
         @inline def defaultConfigPath = Paths.get(".scalafmt.conf")
-        @inline def defaultConfig     = if (Files.exists(defaultConfigPath)) defaultConfigPath else Paths.get("")
+        @inline def defaultConfig     =
+          if (Files.exists(defaultConfigPath)) defaultConfigPath
+          else {
+            val defaultScalafmtCalibanToolsFile = "default.scalafmt.conf"
+            val uri                             = this.getClass.getClassLoader.getResource(defaultScalafmtCalibanToolsFile).toURI
+            uri.getScheme match {
+              case "file" => Paths.get(uri)
+              case "jar"  =>
+                // scalafmt can't access a file inside a JAR so we'll copy the content into a temp file
+                val jar            = new JarFile(this.getClass.getProtectionDomain.getCodeSource.getLocation.toURI.getPath)
+                val file           = Files.createTempFile(null, null)
+                val scalafmtConfig = jar.getInputStream(jar.getEntry(defaultScalafmtCalibanToolsFile))
+                Files.copy(scalafmtConfig, file, StandardCopyOption.REPLACE_EXISTING)
+                file
+              case _      => Paths.get("")
+            }
+          }
 
         fmtPath.fold(defaultConfig)(Paths.get(_))
       }
@@ -24,8 +41,6 @@ object Formatter {
       val scalafmt =
         Scalafmt
           .create(this.getClass.getClassLoader)
-          .withRespectVersion(false)
-          .withDefaultVersion("2.7.5")                           // For retro-compatibility
           .withReporter(new ConsoleScalafmtReporter(System.out)) // defaults prints everything to System.err
 
       val result = strs.map { case (name, code) => name -> scalafmt.format(config, Paths.get(s"$name.scala"), code) }