diff --git a/packages/cashscript/src/debugging.ts b/packages/cashscript/src/debugging.ts
index ca1d17dcc..31a90b392 100644
--- a/packages/cashscript/src/debugging.ts
+++ b/packages/cashscript/src/debugging.ts
@@ -1,4 +1,4 @@
-import { AuthenticationErrorCommon, AuthenticationInstruction, AuthenticationProgramCommon, AuthenticationProgramStateCommon, WalletTemplate, WalletTemplateScriptUnlocking, binToHex, createCompiler, decodeAuthenticationInstructions, encodeAuthenticationInstruction, walletTemplateToCompilerConfiguration } from '@bitauth/libauth';
+import { AuthenticationErrorBch2025Additions, AuthenticationErrorCommon, AuthenticationInstruction, AuthenticationProgramCommon, AuthenticationProgramStateCommon, WalletTemplate, WalletTemplateScriptUnlocking, binToHex, createCompiler, decodeAuthenticationInstructions, encodeAuthenticationInstruction, walletTemplateToCompilerConfiguration } from '@bitauth/libauth';
 import { Artifact, LogData, LogEntry, Op, PrimitiveType, StackItem, asmToBytecode, bytecodeToAsm, decodeBool, decodeInt, decodeString } from '@cashscript/utils';
 import { findLastIndex, toRegExp } from './utils.js';
 import { FailedRequireError, FailedTransactionError, FailedTransactionEvaluationError } from './Errors.js';
@@ -93,7 +93,10 @@ const debugSingleScenario = (
     }
   }
 
-  const lastExecutedDebugStep = executedDebugSteps[executedDebugSteps.length - 1];
+  // Instructions in a branch that is not taken are skipped, but still cost operations, so a resource limit can be reached on
+  // one of them. Evaluation stops at the step that raised an error, so that step is kept even if it was skipped.
+  const finalDebugStep = lockingScriptDebugResult[lockingScriptDebugResult.length - 1];
+  const lastExecutedDebugStep = finalDebugStep?.error ? finalDebugStep : executedDebugSteps[executedDebugSteps.length - 1];
 
   // If an error is present in the last step, that means a require statement in the middle of the function failed
   if (lastExecutedDebugStep.error) {
@@ -122,7 +125,11 @@ const debugSingleScenario = (
     }
 
     const frame = resolveFrame(artifact, lastExecutedDebugStep);
-    const requireStatement = frame.requires.find((statement) => statement.ip === requireStatementIp);
+    // A resource limit can run out on any instruction, including the one a require statement ends in, so it is never
+    // attributed to that require: its condition did not fail, the transaction ran out of budget
+    const requireStatement = isResourceLimitError(error)
+      ? undefined
+      : frame.requires.find((statement) => statement.ip === requireStatementIp);
 
     if (requireStatement) {
       const callStack = buildCallStack(artifact, lastExecutedDebugStep, frame, requireStatement, failingIp);
@@ -395,3 +402,13 @@ const verifyFullTransaction = (template: WalletTemplate): void => {
 const isSignatureCheckWithoutVerify = (instruction: AuthenticationInstruction): boolean => {
   return [Op.OP_CHECKSIG, Op.OP_CHECKMULTISIG, Op.OP_CHECKDATASIG].includes(instruction.opcode);
 };
+
+// Budgets that are counted per operation, so they can run out on the instruction a require statement ends in
+const RESOURCE_LIMIT_ERRORS: string[] = [
+  AuthenticationErrorBch2025Additions.excessiveOperationCost,
+  AuthenticationErrorBch2025Additions.excessiveHashing,
+  AuthenticationErrorCommon.exceededMaximumSignatureCheckCount,
+  AuthenticationErrorCommon.exceededMaximumOperationCount,
+];
+
+const isResourceLimitError = (error: string): boolean => RESOURCE_LIMIT_ERRORS.some((limit) => error.includes(limit));
diff --git a/packages/cashscript/test/debugging.test.ts b/packages/cashscript/test/debugging.test.ts
index a999c8646..887233fb5 100644
--- a/packages/cashscript/test/debugging.test.ts
+++ b/packages/cashscript/test/debugging.test.ts
@@ -1,11 +1,12 @@
-import { Contract, MockNetworkProvider, SignatureAlgorithm, SignatureTemplate, TransactionBuilder, UnlockerLockingBytecodeMismatchError, VmTarget } from '../src/index.js';
+import { Contract, FailedTransactionEvaluationError, MockNetworkProvider, SignatureAlgorithm, SignatureTemplate, TransactionBuilder, UnlockerLockingBytecodeMismatchError, VmTarget } from '../src/index.js';
 import { DEFAULT_VM_TARGET, getLockScriptName } from '../src/libauth-template/utils.js';
 import { aliceAddress, alicePriv, alicePub, bobPriv, bobPub } from './fixture/vars.js';
 import { randomUtxo } from '../src/utils.js';
-import { AuthenticationErrorCommon, binToHex, hexToBin } from '@bitauth/libauth';
+import { AuthenticationErrorBch2025Additions, AuthenticationErrorCommon, binToHex, hexToBin } from '@bitauth/libauth';
 import {
   artifactTestMultipleConstructorParameters,
   artifactTestLogs,
+  artifactTestOperationCostOverrun,
   artifactTestConsecutiveLogs,
   artifactTestMultipleLogs,
   artifactTestRequires,
@@ -638,6 +639,42 @@ describe('Debugging tests', () => {
       ].value`);
       expect(() => transaction.debug()).toThrow(`Reason: ${AuthenticationErrorCommon.invalidTransactionOutputIndex}`);
     });
+
+    // An operation cost overrun can stop evaluation on any instruction: the one a require statement ends in, or one in a
+    // skipped branch, which still costs operations
+    it('should report an operation cost overrun as such, not as a failed require statement', async () => {
+      const contract = new Contract(artifactTestOperationCostOverrun, [], { provider });
+      const requireIps = artifactTestOperationCostOverrun.debug!.requires.map((statement) => statement.ip);
+      let overrunsOnRequires = 0;
+
+      // The rounds spend most of the budget and the padding sets how large it is, so scanning both moves the point where
+      // it runs out across the instructions of the loop and of the require statements after it
+      for (let rounds = 37n; rounds <= 45n; rounds++) {
+        for (let padding = 0; ; padding++) {
+          const utxo = provider.addUtxo(contract.address, randomUtxo());
+          const transaction = new TransactionBuilder({ provider })
+            .addInput(utxo, contract.unlock.spend(rounds, new Uint8Array(padding)))
+            .addOutput({ to: contract.address, amount: 1000n });
+
+          let failure: unknown;
+          try {
+            transaction.debug();
+            break;
+          } catch (error) {
+            failure = error;
+          }
+
+          // The require conditions all hold, so every failure is the overrun
+          expect(failure).toBeInstanceOf(FailedTransactionEvaluationError);
+          const { libauthErrorMessage, failingInstructionPointer } = failure as FailedTransactionEvaluationError;
+          expect(libauthErrorMessage).toContain(AuthenticationErrorBch2025Additions.excessiveOperationCost);
+          if (requireIps.includes(failingInstructionPointer)) overrunsOnRequires++;
+        }
+      }
+
+      // The scan has to hit the case #456 is about: the budget running out on a require statement's own instruction
+      expect(overrunsOnRequires).toBeGreaterThan(0);
+    });
   });
 
   describe('Template encoding', () => {
diff --git a/packages/cashscript/test/fixture/debugging/debugging_contracts.ts b/packages/cashscript/test/fixture/debugging/debugging_contracts.ts
index f957f817b..644d721e1 100644
--- a/packages/cashscript/test/fixture/debugging/debugging_contracts.ts
+++ b/packages/cashscript/test/fixture/debugging/debugging_contracts.ts
@@ -592,6 +592,21 @@ contract Test(pubkey owner, int num, int num2, int num3, int num4, int num5) {
 }
 `;
 
+// The loop spends most of the operation cost budget, and the padding sets how much budget the input gets, so a test can
+// move the point where it runs out across the instructions of the require statements after the loop
+const CONTRACT_TEST_OPERATION_COST_OVERRUN = `
+contract Test() {
+  function spend(int rounds, bytes unused padding) {
+    bytes32 digest = sha256(0x00);
+    for (int i = 0; i < rounds; i = i + 1) {
+      digest = sha256(digest);
+    }
+    require(tx.outputs[0].lockingBytecode == tx.inputs[0].lockingBytecode, "Output 0 must pay back to the contract");
+    require(tx.outputs[0].value >= 1000, "Output 0 must keep 1000 sats");
+  }
+}
+`;
+
 export const artifactTestRequires = compileString(CONTRACT_TEST_REQUIRES);
 export const artifactTestSingleFunction = compileString(CONTRACT_TEST_REQUIRE_SINGLE_FUNCTION);
 export const artifactTestMultilineRequires = compileString(CONTRACT_TEST_MULTILINE_REQUIRES);
@@ -618,6 +633,7 @@ export const artifactTestNestedImportedFunctions = compileString(
 );
 export const artifactTestMixedNestedFunctions = compileString(CONTRACT_TEST_MIXED_NESTED_FUNCTIONS);
 export const artifactTestInlinedCallingDefined = compileString(CONTRACT_TEST_INLINED_CALLING_DEFINED);
+export const artifactTestOperationCostOverrun = compileString(CONTRACT_TEST_OPERATION_COST_OVERRUN);
 
 // Compiled from a file so the imported function (function_helpers.cash) keeps its own source provenance.
 export const artifactTestImportedFunctionDebugging = compileFile(new URL('./function_importer.cash', import.meta.url));
diff --git a/website/docs/releases/release-notes.md b/website/docs/releases/release-notes.md
index cb7dd3c95..eeb8a7f37 100644
--- a/website/docs/releases/release-notes.md
+++ b/website/docs/releases/release-notes.md
@@ -38,6 +38,7 @@ This release contains several breaking changes, please refer to the [migration n
 - :bug: Fix bug where invalid hex strings were silently encoded to different bytes.
 - :bug: Fix bug where `pubkey` arguments were not checked to be 33 or 65 bytes.
 - :bug: Fix bug in `ElectrumNetworkProvider` automatic connection management.
+- :bug: Fix bug where debugging reported a VM resource limit as a failed require statement.
 - :bug: Fix minimum fee check rounding bug.
 - :bug: Fix bug where `setLocktime()` accepted invalid values.
 - :bug: Fix edge case bug where a failing final `require(variable)` statement was reported incorrectly in debugging.