diff --git a/quill-jdbc-zio/src/main/scala/io/getquill/context/ZioJdbc.scala b/quill-jdbc-zio/src/main/scala/io/getquill/context/ZioJdbc.scala
index 03967e33..48a8dc03 100644
--- a/quill-jdbc-zio/src/main/scala/io/getquill/context/ZioJdbc.scala
+++ b/quill-jdbc-zio/src/main/scala/io/getquill/context/ZioJdbc.scala
@@ -74,58 +74,59 @@ object ZioJdbc {
       }
   }
 
-  implicit class QuillZioDataSourceExt[T](qzio: ZIO[DataSource, Throwable, T]) {
+  implicit class QuillZioDataSourceExt[T, E](qzio: ZIO[DataSource, E, T]) {
 
-    import io.getquill.context.qzio.ImplicitSyntax._
+    import io.getquill.context.qzio.ImplicitSyntax.*
 
-    def implicitDS(implicit implicitEnv: Implicit[DataSource]): ZIO[Any, SQLException, T] =
-      (for {
+    def implicitDS(implicit implicitEnv: Implicit[DataSource]): ZIO[Any, E, T] =
+      for {
         q <- qzio.provideEnvironment(ZEnvironment(implicitEnv.env))
-      } yield q).refineToOrDie[SQLException]
+      } yield q
   }
 
-  implicit class QuillZioSomeDataSourceExt[T, R](qzio: ZIO[DataSource with R, Throwable, T])(implicit tag: Tag[R]) {
+  implicit class QuillZioSomeDataSourceExt[T, E, R](qzio: ZIO[DataSource with R, E, T])(implicit tag: Tag[R]) {
 
-    import io.getquill.context.qzio.ImplicitSyntax._
+    import io.getquill.context.qzio.ImplicitSyntax.*
 
-    def implicitSomeDS(implicit implicitEnv: Implicit[DataSource]): ZIO[R, SQLException, T] =
-      (for {
+    def implicitSomeDS(implicit implicitEnv: Implicit[DataSource]): ZIO[R, E, T] =
+      for {
         r <- ZIO.environment[R]
         q <- qzio
           .provideSomeLayer[DataSource](ZLayer.succeedEnvironment(r))
           .provideEnvironment(ZEnvironment(implicitEnv.env))
-      } yield q).refineToOrDie[SQLException]
+      } yield q
   }
 
   implicit class QuillZioExtPlain[E, T](qzio: ZIO[Connection, E, T]) {
 
-    import io.getquill.context.qzio.ImplicitSyntax._
+    import io.getquill.context.qzio.ImplicitSyntax.*
 
     def onDataSource: ZIO[DataSource, E | SQLException, T] = qzio.provideSomeLayer(Quill.Connection.acquireScoped)
 
-    def implicitDS(implicit implicitEnv: Implicit[DataSource]): ZIO[Any, E | SQLException, T] = {
-      val zioWithDataSource: ZIO[DataSource, E | SQLException, T] = qzio.provideSomeLayer(Quill.Connection.acquireScoped)
-      zioWithDataSource.provideEnvironment(ZEnvironment(implicitEnv.env))
-    }
+    def implicitDS(implicit implicitEnv: Implicit[DataSource]): ZIO[Any, E | SQLException, T] =
+      onDataSource.provideEnvironment(ZEnvironment(implicitEnv.env))
   }
 
-  implicit class QuillZioExt[T, R](qzio: ZIO[Connection with R, Throwable, T])(implicit tag: Tag[R]) {
+  implicit class QuillZioExt[T, E, R](qzio: ZIO[Connection with R, E, T])(implicit tag: Tag[R]) {
     /**
      * Change `Connection` of a QIO to `DataSource with Closeable` by providing a `DataSourceLayer.live` instance
      * which will grab a connection from the data-source, perform the QIO operation, and the immediately release the connection.
      * This is used for data-sources that have pooled connections e.g. Hikari.
      * {{{
      *   def ds: DataSource with Closeable = ...
-     *   run(query[Person]).onDataSource.provide(Has(ds))
+     *   run(query[Person]).onDataSource.provide(ds)
      * }}}
      */
-    def onSomeDataSource: ZIO[DataSource with R, SQLException, T] =
-      (for {
+    def onSomeDataSource: ZIO[DataSource with R, E | SQLException, T] =
+      for {
         r <- ZIO.environment[R]
-        q <- qzio
-          .provideSomeLayer[Connection](ZLayer.succeedEnvironment(r))
-          .provideSomeLayer(Quill.Connection.acquireScoped)
-      } yield q).refineToOrDie[SQLException]
+        // This needs to be typed explicitly
+        z: ZIO[DataSource, E | SQLException, T] =
+          qzio
+            .provideSomeLayer[Connection](ZLayer.succeedEnvironment(r))
+            .provideSomeLayer(Quill.Connection.acquireScoped)
+        q <- z
+      } yield q
   }
 
   /**
diff --git a/quill-jdbc-zio/src/main/scala/io/getquill/context/qzio/ZioJdbcContext.scala b/quill-jdbc-zio/src/main/scala/io/getquill/context/qzio/ZioJdbcContext.scala
index 5a33c2f2..3cb40ba7 100644
--- a/quill-jdbc-zio/src/main/scala/io/getquill/context/qzio/ZioJdbcContext.scala
+++ b/quill-jdbc-zio/src/main/scala/io/getquill/context/qzio/ZioJdbcContext.scala
@@ -6,7 +6,7 @@ import io.getquill.context.sql.idiom.SqlIdiom
 import io.getquill.context.{ContextVerbStream, ExecutionInfo, ProtoContextSecundus}
 import zio.Exit.{Failure, Success}
 import zio.stream.ZStream
-import zio.{FiberRef, Runtime, UIO, Unsafe, ZEnvironment, ZIO}
+import zio.{FiberRef, Runtime, Scope, UIO, Unsafe, ZEnvironment, ZIO}
 
 import java.sql.{Array as _, *}
 import javax.sql.DataSource
@@ -23,11 +23,11 @@ import zio.ZIO.blocking
  * as a resource dependency which can be provided later (see `ZioJdbc` for helper methods
  * that assist in doing this).
  *
- * The resource dependency itself is just a `Has[Connection]`. Since this is frequently used
- * The type `QIO[T]` i.e. Quill-IO has been defined as an alias for `ZIO[Has[Connection], SQLException, T]`.
+ * The resource dependency itself is just a `Connection`. Since this is frequently used
+ * The type `QIO[T]` i.e. Quill-IO has been defined as an alias for `ZIO[Connection, SQLException, T]`.
  *
  * Since in most JDBC use-cases, a connection-pool datasource i.e. Hikari is used it would actually
- * be much more useful to interact with `ZIO[Has[DataSource], SQLException, T]`.
+ * be much more useful to interact with `ZIO[DataSource, SQLException, T]`.
  * The extension method `.onDataSource` in `io.getquill.context.ZioJdbc.QuillZioExt` will perform this conversion
  * (for even more brevity use `onDS` which is an alias for this method).
  * {{
@@ -41,7 +41,7 @@ import zio.ZIO.blocking
  *   Runtime.default.unsafeRun(MyZioContext.run(query[Person]).ContextTranslateProtoprovideLayer(zioDS))
  * }}
  *
- * Note however that the one exception to these cases are the `prepare` methods where a `ZIO[Has[Connection], SQLException, PreparedStatement]`
+ * Note however that the one exception to these cases are the `prepare` methods where a `ZIO[Connection, SQLException, PreparedStatement]`
  * is being returned. In those situations the acquire-action-release pattern does not make any sense because the `PrepareStatement`
  * is only held open while it's host-connection exists.
  */
@@ -162,12 +162,12 @@ abstract class ZioJdbcContext[+Dialect <: SqlIdiom, +Naming <: NamingStrategy] e
    * Execute instructions in a transaction. For example, to add a Person row to the database and return
    * the contents of the Person table immediately after that:
    * {{{
-   *   val a = run(query[Person].insert(Person(...)): ZIO[Has[DataSource], SQLException, Long]
-   *   val b = run(query[Person]): ZIO[Has[DataSource], SQLException, Person]
-   *   transaction(a *> b): ZIO[Has[DataSource], SQLException, Person]
+   *   val a = run(query[Person].insert(Person(...)): ZIO[DataSource, SQLException, Long]
+   *   val b = run(query[Person]): ZIO[DataSource, SQLException, Person]
+   *   transaction(a *> b): ZIO[DataSource, SQLException, Person]
    * }}}
    *
-   * The order of operations run in the case that a new connection needs to be aquired are as follows:
+   * The order of operations run in the case that a new connection needs to be acquired are as follows:
    * <pre>
    *   getDS from env,
    *   acquire-connection,
@@ -179,14 +179,14 @@ abstract class ZioJdbcContext[+Dialect <: SqlIdiom, +Naming <: NamingStrategy] e
    *   release-conn
    * </pre>
    */
-  def transaction[R <: DataSource, A](op: ZIO[R, Throwable, A]): ZIO[R, Throwable, A] = {
+  def transaction[R <: DataSource, E, A](op: ZIO[R, E, A]): ZIO[R, E | SQLException, A] = {
     blocking(currentConnection.get.flatMap {
       // We can just return the op in the case that there is already a connection set on the fiber ref
       // because the op is execute___ which will lookup the connection from the fiber ref via onConnection/onConnectionStream
       // This will typically happen for nested transactions e.g. transaction(transaction(a *> b) *> c)
-      case Some(connection) => op
+      case Some(_) => op
       case None =>
-        val connection = for {
+        val connection: ZIO[Scope with DataSource, SQLException, Unit] = (for {
           env <- ZIO.service[DataSource]
           connection <- scopedBestEffort(attemptBlocking(env.getConnection))
           // Get the current value of auto-commit
@@ -197,7 +197,7 @@ abstract class ZioJdbcContext[+Dialect <: SqlIdiom, +Naming <: NamingStrategy] e
             attemptBlocking(connection.setAutoCommit(prevAutoCommit)).orDie
           }
           _ <- ZIO.acquireRelease(currentConnection.set(Some(connection))) { _ =>
-            // Note. We are failing the fiber if auto-commit reset fails. For some circumstances this may be too aggresive.
+            // Note. We are failing the fiber if auto-commit reset fails. For some circumstances this may be too aggressive.
             // If the connection pool e.g. Hikari resets this property for a recycled connection anyway doing it here
             // might not be necessary
             currentConnection.set(None)
@@ -207,7 +207,7 @@ abstract class ZioJdbcContext[+Dialect <: SqlIdiom, +Naming <: NamingStrategy] e
             case Success(_)     => blocking(ZIO.succeed(connection.commit()))
             case Failure(cause) => blocking(ZIO.succeed(connection.rollback()))
           }
-        } yield ()
+        } yield ()).refineToOrDie[SQLException]
 
         ZIO.scoped(connection *> op)
     })
diff --git a/quill-jdbc-zio/src/main/scala/io/getquill/jdbczio/QuillBaseContext.scala b/quill-jdbc-zio/src/main/scala/io/getquill/jdbczio/QuillBaseContext.scala
index 48ef8a59..79393b1d 100644
--- a/quill-jdbc-zio/src/main/scala/io/getquill/jdbczio/QuillBaseContext.scala
+++ b/quill-jdbc-zio/src/main/scala/io/getquill/jdbczio/QuillBaseContext.scala
@@ -111,17 +111,17 @@ trait QuillBaseContext[+Dialect <: SqlIdiom, +Naming <: NamingStrategy] extends
    * Execute instructions in a transaction. For example, to add a Person row to the database and return
    * the contents of the Person table immediately after that:
    * {{{
-   *   val a = run(query[Person].insert(Person(...)): ZIO[Has[DataSource], SQLException, Long]
-   *   val b = run(query[Person]): ZIO[Has[DataSource], SQLException, Person]
-   *   transaction(a *> b): ZIO[Has[DataSource], SQLException, Person]
+   *   val a = run(query[Person].insert(Person(...)): ZIO[DataSource, SQLException, Long]
+   *   val b = run(query[Person]): ZIO[DataSource, SQLException, Person]
+   *   transaction(a *> b): ZIO[DataSource, SQLException, Person]
    * }}}
    */
-  def transaction[R, A](op: ZIO[R, Throwable, A]): ZIO[R, Throwable, A] =
+  def transaction[R, E ,A](op: ZIO[R, E, A]): ZIO[R, E | SQLException, A] =
     dsDelegate.transaction(op).provideSomeEnvironment[R]((env: ZEnvironment[R]) => env.add[DataSource](ds: DataSource))
 
-  private def onDS[T](qio: ZIO[DataSource, SQLException, T]): ZIO[Any, SQLException, T] =
+  private def onDS[T, E](qio: ZIO[DataSource, E, T]): ZIO[Any, E, T] =
     qio.provideEnvironment(ZEnvironment(ds))
 
-  private def onDSStream[T](qstream: ZStream[DataSource, SQLException, T]): ZStream[Any, SQLException, T] =
+  private def onDSStream[T, E](qstream: ZStream[DataSource, E, T]): ZStream[Any, E, T] =
     qstream.provideEnvironment(ZEnvironment(ds))
 }
diff --git a/quill-jdbc-zio/src/test/scala/io/getquill/misc/OnDataSourceSpec.scala b/quill-jdbc-zio/src/test/scala/io/getquill/misc/OnDataSourceSpec.scala
index 8daf6967..72b32fab 100644
--- a/quill-jdbc-zio/src/test/scala/io/getquill/misc/OnDataSourceSpec.scala
+++ b/quill-jdbc-zio/src/test/scala/io/getquill/misc/OnDataSourceSpec.scala
@@ -7,6 +7,7 @@ import zio.{ ZIO, ZLayer }
 import io.getquill.context.ZioJdbc._
 import io.getquill._
 
+import java.sql.Connection
 import javax.sql.DataSource
 
 class OnDataSourceSpec extends PeopleZioProxySpec {
@@ -56,6 +57,15 @@ class OnDataSourceSpec extends PeopleZioProxySpec {
 
       people mustEqual peopleEntries.filter(p => p.name == "Alex")
     }
+    "should keep existing errors" in {
+      // This is how you import the encoders/decoders of `underlying` context without importing things that will conflict
+      // i.e. the quote and run methods
+      import testContext.underlying.{prepare => _, run => _, _}
+      import java.sql.SQLException
+
+      val zioThatCanFail: ZIO[Connection, String, Nothing] = ZIO.service[Connection] *> ZIO.fail("Custom Error")
+      "val result: ZIO[DataSource, String | SQLException, List[Person]] = zioThatCanFail.onDataSource" should compile
+    }
   }
 
   "implicitDS on underlying context" - {
@@ -99,5 +109,19 @@ class OnDataSourceSpec extends PeopleZioProxySpec {
         svc <- ZIO.attempt(Service(ds))
       } yield (svc.people)).runSyncUnsafe() mustEqual peopleEntries.filter(p => p.name == "Alex")
     }
+    "should keep existing errors" in {
+      // This is how you import the encoders/decoders of `underlying` context without importing things that will conflict
+      // i.e. the quote and run methods
+      import testContext.underlying.{prepare => _, run => _, _}
+      import java.sql.SQLException
+
+      (for {
+        ds <- ZIO.service[DataSource]
+        given Implicit[DataSource] = Implicit(ds)
+      } yield {
+        val zioThatCanFail: ZIO[DataSource, String, Nothing] = ZIO.service[DataSource] *> ZIO.fail("Custom Error")
+        "val result: ZIO[DataSource, String | SQLException, List[Person]] = zioThatCanFail.implicitDS" should compile
+      }).runSyncUnsafe()
+    }
   }
 }
\ No newline at end of file
diff --git a/quill-jdbc-zio/src/test/scala/io/getquill/misc/ZioJdbcUnderlyingContextSpec.scala b/quill-jdbc-zio/src/test/scala/io/getquill/misc/ZioJdbcUnderlyingContextSpec.scala
index 412cb487..aed90e48 100644
--- a/quill-jdbc-zio/src/test/scala/io/getquill/misc/ZioJdbcUnderlyingContextSpec.scala
+++ b/quill-jdbc-zio/src/test/scala/io/getquill/misc/ZioJdbcUnderlyingContextSpec.scala
@@ -75,6 +75,12 @@ class ZioJdbcUnderlyingContextSpec extends ZioProxySpec {
         r <- testContext.underlying.run(qr1)
       } yield r).onDataSource.runSyncUnsafe().map(_.i) mustEqual List(33)
     }
+    "keep existing errors" in {
+      import java.sql.{Connection, SQLException}
+
+      val zioThatCanFail: ZIO[Any, String, Nothing] = ZIO.fail("Custom Error")
+      "val result: ZIO[Connection, String | SQLException, List[TestEntity]] = testContext.underlying.transaction(zioThatCanFail *> testContext.underlying.run(qr1))" must compile
+    }
     // "prepare" in {
     //   testContext.underlying.prepareParams(
     //     "select * from Person where name=? and age > ?", (ps, session) => (List("Sarah", 127), ps)
diff --git a/quill-jdbc-zio/src/test/scala/io/getquill/postgres/ZioJdbcContextSpec.scala b/quill-jdbc-zio/src/test/scala/io/getquill/postgres/ZioJdbcContextSpec.scala
index bb2aa346..207ba96a 100644
--- a/quill-jdbc-zio/src/test/scala/io/getquill/postgres/ZioJdbcContextSpec.scala
+++ b/quill-jdbc-zio/src/test/scala/io/getquill/postgres/ZioJdbcContextSpec.scala
@@ -76,5 +76,9 @@ class ZioJdbcContextSpec extends ZioSpec {
         "select * from Person where name=? and age > ?", (ps, session) => (List("Sarah", 127), ps)
       ).runSyncUnsafe() mustEqual List("127", "'Sarah'")
     }
+    "keep existing errors" in {
+      val zioThatCanFail: ZIO[Any, String, Nothing] = ZIO.fail("Custom Error")
+      "val result: ZIO[Any, String | SQLException, List[TestEntity]] = testContext.transaction(zioThatCanFail *> testContext.run(qr1))" must compile
+    }
   }
 }