diff --git a/packages/core/src/v3/workers/taskExecutor.ts b/packages/core/src/v3/workers/taskExecutor.ts
index 74acc8dc82..3e8f64ab58 100644
--- a/packages/core/src/v3/workers/taskExecutor.ts
+++ b/packages/core/src/v3/workers/taskExecutor.ts
@@ -143,7 +143,21 @@ export class TaskExecutor {
             );
           }
 
-          parsedPayload = await this.#parsePayload(payloadResult);
+          const [parsePayloadError, parsedPayloadResult] = await tryCatch(
+            this.#parsePayload(payloadResult)
+          );
+
+          if (parsePayloadError) {
+            recordSpanException(span, parsePayloadError);
+            return this.#internalErrorResult(
+              execution,
+              TaskRunErrorCodes.TASK_INPUT_ERROR,
+              parsePayloadError,
+              true
+            );
+          }
+
+          parsedPayload = parsedPayloadResult;
 
           lifecycleHooks.registerOnWaitHookListener(async (wait) => {
             await this.#callOnWaitFunctions(wait, parsedPayload, ctx, initOutput, signal);
@@ -1369,7 +1383,12 @@ export class TaskExecutor {
     });
   }
 
-  #internalErrorResult(execution: TaskRunExecution, code: TaskRunErrorCodes, error: unknown) {
+  #internalErrorResult(
+    execution: TaskRunExecution,
+    code: TaskRunErrorCodes,
+    error: unknown,
+    skippedRetrying?: boolean
+  ) {
     return {
       ok: false,
       id: execution.run.id,
@@ -1384,6 +1403,7 @@ export class TaskExecutor {
             : undefined,
         stackTrace: error instanceof Error ? error.stack : undefined,
       },
+      skippedRetrying,
     } satisfies TaskRunExecutionResult;
   }
 
diff --git a/packages/core/test/taskExecutor.test.ts b/packages/core/test/taskExecutor.test.ts
index 531a872e4f..d78cc57cd7 100644
--- a/packages/core/test/taskExecutor.test.ts
+++ b/packages/core/test/taskExecutor.test.ts
@@ -1809,6 +1809,37 @@ describe("TaskExecutor", () => {
     expect(delay).toBeGreaterThan(29900); // Allow for some time passing during test
     expect(delay).toBeLessThan(32000); // Account for max 2000ms jitter
   });
+
+  test("should return error and skip retrying if parsePayload throws", async () => {
+    const parseError = new Error("Parse failed");
+    const task = {
+      id: "test-task",
+      fns: {
+        run: async () => {
+          throw new Error("Should not reach run");
+        },
+        parsePayload: async () => {
+          throw parseError;
+        },
+      },
+    };
+
+    const result = await executeTask(task, { foo: "bar" }, undefined);
+
+    expect(result).toEqual({
+      result: {
+        ok: false,
+        id: "test-run-id",
+        error: {
+          type: "INTERNAL_ERROR",
+          code: TaskRunErrorCodes.TASK_INPUT_ERROR,
+          message: "TaskPayloadParsedError: Parsing payload with schema failed: Parse failed",
+          stackTrace: expect.any(String),
+        },
+        skippedRetrying: true,
+      },
+    });
+  });
 });
 
 function executeTask(
@@ -1828,7 +1859,11 @@ function executeTask(
     logger: tracingSDK.getLogger("test-task"),
   });
 
-  const consoleInterceptor = new ConsoleInterceptor(tracingSDK.getLogger("test-task"), false);
+  const consoleInterceptor = new ConsoleInterceptor(
+    tracingSDK.getLogger("test-task"),
+    false,
+    false
+  );
 
   const executor = new TaskExecutor(task, {
     tracingSDK,