diff --git a/gui_agents/s3/utils/local_env.py b/gui_agents/s3/utils/local_env.py
index d69b1b5f..7ba94847 100644
--- a/gui_agents/s3/utils/local_env.py
+++ b/gui_agents/s3/utils/local_env.py
@@ -1,6 +1,14 @@
+import locale
 import subprocess
 import sys
-from typing import Dict
+from typing import Dict, Optional, Union
+
+
+def _decode_output(output: Optional[Union[bytes, str]]) -> str:
+    # TimeoutExpired captures bytes even with text=True, possibly ending mid-character.
+    if isinstance(output, bytes):
+        return output.decode(locale.getpreferredencoding(False), errors="replace")
+    return output or ""
 
 
 class LocalController:
@@ -34,7 +42,7 @@ def run_bash_script(self, code: str, timeout: int = 30) -> Dict:
             return {
                 "status": "error",
                 "returncode": -1,
-                "output": e.stdout or "",
+                "output": _decode_output(e.stdout) + _decode_output(e.stderr),
                 "error": f"TimeoutExpired: {str(e)}",
             }
         except Exception as e:
diff --git a/tests/test_local_env.py b/tests/test_local_env.py
new file mode 100644
index 00000000..d354fa9c
--- /dev/null
+++ b/tests/test_local_env.py
@@ -0,0 +1,81 @@
+import json
+import locale
+import os
+import subprocess
+import unittest
+from unittest.mock import patch
+
+from gui_agents.s3.utils.local_env import LocalController
+
+
+class TestBashTimeoutOutput(unittest.TestCase):
+    def test_timeout_output_remains_json_serializable(self):
+        error = subprocess.TimeoutExpired(
+            "bash", 0.1, output=b"partial stdout", stderr=b"partial stderr"
+        )
+        with patch("subprocess.run", side_effect=error):
+            result = LocalController().run_bash_script("unused", timeout=1)
+
+        self.assertEqual(result["status"], "error")
+        self.assertEqual(result["returncode"], -1)
+        self.assertEqual(result["output"], "partial stdoutpartial stderr")
+        self.assertIn("TimeoutExpired", result["error"])
+        json.dumps(result)
+
+    def test_timeout_decodes_using_the_subprocess_text_encoding(self):
+        error = subprocess.TimeoutExpired("bash", 1, output=b"caf\xe9")
+        with patch("subprocess.run", side_effect=error), patch.object(
+            locale, "getpreferredencoding", return_value="cp1252"
+        ):
+            result = LocalController().run_bash_script("unused")
+        self.assertEqual(result["output"], "café")
+        json.dumps(result)
+
+    def test_partial_invalid_output_does_not_mask_timeout(self):
+        error = subprocess.TimeoutExpired("bash", 1, output=b"partial\xff")
+        with patch("subprocess.run", side_effect=error), patch.object(
+            locale, "getpreferredencoding", return_value="utf-8"
+        ):
+            result = LocalController().run_bash_script("unused")
+        self.assertEqual(result["output"], "partial\ufffd")
+        self.assertIn("TimeoutExpired", result["error"])
+
+    def test_timeout_also_preserves_text_or_missing_output(self):
+        for stdout, stderr, expected in [
+            (None, None, ""),
+            ("stdout", "stderr", "stdoutstderr"),
+            (None, b"stderr", "stderr"),
+        ]:
+            with self.subTest(stdout=stdout, stderr=stderr):
+                error = subprocess.TimeoutExpired(
+                    "bash", 1, output=stdout, stderr=stderr
+                )
+                with patch("subprocess.run", side_effect=error):
+                    result = LocalController().run_bash_script("unused")
+                self.assertEqual(result["output"], expected)
+                json.dumps(result)
+
+    @unittest.skipUnless(os.path.exists("/bin/bash"), "requires bash")
+    def test_real_timeout_keeps_partial_output_as_text(self):
+        result = LocalController().run_bash_script(
+            "printf 'stdout'; printf 'stderr' >&2; while :; do :; done", timeout=0.5
+        )
+        self.assertEqual(result["status"], "error")
+        # A login shell may also print output from the user's profile.
+        self.assertIsInstance(result["output"], str)
+        self.assertIn("stdout", result["output"])
+        self.assertIn("stderr", result["output"])
+        json.dumps(result)
+
+    def test_success_and_nonzero_exit_remain_text(self):
+        for code in (0, 2):
+            with self.subTest(code=code):
+                completed = subprocess.CompletedProcess(
+                    [], code, stdout="stdout", stderr="stderr"
+                )
+                with patch("subprocess.run", return_value=completed):
+                    result = LocalController().run_bash_script("unused")
+                self.assertEqual(result["output"], "stdoutstderr")
+                self.assertEqual(result["returncode"], code)
+                self.assertEqual(result["status"], "ok" if code == 0 else "error")
+                json.dumps(result)