diff --git a/.changeset/popular-chefs-laugh.md b/.changeset/popular-chefs-laugh.md
new file mode 100644
index 0000000..b40b782
--- /dev/null
+++ b/.changeset/popular-chefs-laugh.md
@@ -0,0 +1,6 @@
+---
+"@grammarly/focal-atom": minor
+"@grammarly/focal": minor
+---
+
+Update peer dependency to include rxjs versions up to 7.x
diff --git a/packages/focal-atom/package.json b/packages/focal-atom/package.json
index bad0300..956c320 100644
--- a/packages/focal-atom/package.json
+++ b/packages/focal-atom/package.json
@@ -94,6 +94,6 @@
     "typescript": "^4.7.4"
   },
   "peerDependencies": {
-    "rxjs": ">= 6.3.3 < 7.0.0-0"
+    "rxjs": ">= 6.3.3 < 8.0.0-0"
   }
 }
diff --git a/packages/focal-atom/src/atom/base.ts b/packages/focal-atom/src/atom/base.ts
index 1b64ae2..145e6fa 100644
--- a/packages/focal-atom/src/atom/base.ts
+++ b/packages/focal-atom/src/atom/base.ts
@@ -2,7 +2,16 @@ import { Lens, Prism, PropExpr } from './../lens'
 import { Option } from './../utils'
 import { structEq } from './../equals'
 
-import { Observable, Subscriber, Subscription, BehaviorSubject, combineLatest } from 'rxjs'
+import { Observable, Subscription, BehaviorSubject, combineLatest, Observer } from 'rxjs'
+
+/** Parameters of the implementation of the overloaded `Subscribable.subscribe` method. */
+type SubscribeParameters<T> = readonly [
+  observerOrNext?: Partial<Observer<T>> | ((value: T) => void),
+] | readonly [
+  next?: ((value: T) => void) | null,
+  error?: ((error: any) => void) | null,
+  complete?: (() => void) | null
+]
 
 /**
  * Read-only atom.
@@ -371,7 +380,13 @@ class LensedAtom<TSource, TDest> extends AbstractAtom<TDest> {
   private _refCount = 0
 
   // Rx method overrides
-  _subscribe(subscriber: Subscriber<TDest>) {
+  subscribe(observerOrNext?: Partial<Observer<TDest>> | ((value: TDest) => void)): Subscription
+  subscribe(
+    next?: ((value: TDest) => void) | null,
+    error?: ((error: any) => void) | null,
+    complete?: (() => void) | null
+  ): Subscription
+  subscribe(...args: SubscribeParameters<TDest>) {
     if (!this._subscription) {
       this._subscription = this._source.subscribe(x => this._onSourceValue(x))
     }
@@ -383,7 +398,7 @@ class LensedAtom<TSource, TDest> extends AbstractAtom<TDest> {
         this._subscription = null
       }
     })
-    sub.add(super._subscribe(subscriber))
+    sub.add(super.subscribe(...(args as [Observer<TDest>])))
 
     return sub
   }
@@ -440,7 +455,13 @@ class AtomViewImpl<TSource, TDest> extends AbstractReadOnlyAtom<TDest> {
   private _refCount = 0
 
   // Rx method overrides
-  _subscribe(subscriber: Subscriber<TDest>) {
+  subscribe(observerOrNext?: Partial<Observer<TDest>> | ((value: TDest) => void)): Subscription
+  subscribe(
+    next?: ((value: TDest) => void) | null,
+    error?: ((error: any) => void) | null,
+    complete?: (() => void) | null
+  ): Subscription
+  subscribe(...args: SubscribeParameters<TDest>) {
     if (!this._subscription) {
       this._subscription = this._source.subscribe(x => this._onSourceValue(x))
     }
@@ -452,7 +473,7 @@ class AtomViewImpl<TSource, TDest> extends AbstractReadOnlyAtom<TDest> {
         this._subscription = null
       }
     })
-    sub.add(super._subscribe(subscriber))
+    sub.add(super.subscribe(...(args as [Observer<TDest>])))
 
     return sub
   }
@@ -510,7 +531,13 @@ export class CombinedAtomViewImpl<TResult> extends AbstractReadOnlyAtom<TResult>
   private _refCount = 0
 
   // Rx method overrides
-  _subscribe(subscriber: Subscriber<TResult>) {
+  subscribe(observerOrNext?: Partial<Observer<TResult>> | ((value: TResult) => void)): Subscription
+  subscribe(
+    next?: ((value: TResult) => void) | null,
+    error?: ((error: any) => void) | null,
+    complete?: (() => void) | null
+  ): Subscription
+  subscribe(...args: SubscribeParameters<TResult>) {
     if (!this._subscription) {
       this._subscription = combineLatest(this._sources)
         .subscribe(xs => this._onSourceValues(xs))
@@ -523,7 +550,7 @@ export class CombinedAtomViewImpl<TResult> extends AbstractReadOnlyAtom<TResult>
         this._subscription = null
       }
     })
-    sub.add(super._subscribe(subscriber))
+    sub.add(super.subscribe(...(args as [Observer<TResult>])))
 
     return sub
   }
diff --git a/packages/focal-atom/test/atom.test.ts b/packages/focal-atom/test/atom.test.ts
index 544f6a3..60722a4 100644
--- a/packages/focal-atom/test/atom.test.ts
+++ b/packages/focal-atom/test/atom.test.ts
@@ -744,7 +744,7 @@ describe('atom', () => {
   describe('fromObservable', () => {
     test('emits atom', async () => {
       const a = await Atom.fromObservable(from([1])).pipe(take(1)).toPromise()
-      expect(a.get()).toEqual(1)
+      expect(a?.get()).toEqual(1)
     })
 
     test('emits atom once', async () => {
@@ -755,7 +755,7 @@ describe('atom', () => {
         from(['hello'])
       ).pipe(take(2), toArray()).toPromise()
 
-      expect(a[1]).toEqual('hello')
+      expect(a?.[1]).toEqual('hello')
     })
 
     test('does not subscribe to source immediately', () => {
diff --git a/packages/focal/package.json b/packages/focal/package.json
index 26e3c78..8727c7a 100644
--- a/packages/focal/package.json
+++ b/packages/focal/package.json
@@ -105,6 +105,6 @@
     "@types/react-dom": ">= 18.0.0 < 19.0.0-0",
     "react": ">= 18.0.0 < 19.0.0-0",
     "react-dom": ">= 18.0.0 < 19.0.0-0",
-    "rxjs": ">= 6.3.3 < 7.0.0-0"
+    "rxjs": ">= 6.3.3 < 8.0.0-0"
   }
 }
diff --git a/packages/focal/src/react/react.ts b/packages/focal/src/react/react.ts
index 2b2878e..b94bc10 100644
--- a/packages/focal/src/react/react.ts
+++ b/packages/focal/src/react/react.ts
@@ -606,9 +606,12 @@ export function classes(
         filterClassNames(cs || []).map(x =>
           // @TODO optimize: unnecessary Observable.of
           // can we actually already just remove this?
-          !(x instanceof Observable) ? of(x) : x
+
+          // we check if x is a string because after `filterClassNames`
+          // it can be only a string as non-observable value; otherwise it is an `ObservableInput`
+          typeof x === 'string' ? of(x) : x
         ),
-        (...cs: ClassNameLike[]) => {
+        (...cs) => {
           const filtered = filterClassNames(cs || [])
 
           return filtered.length > 0