diff --git a/proxy/src/auth/backend/classic.rs b/proxy/src/auth/backend/classic.rs
index de32a06e9e60..6d26c998329c 100644
--- a/proxy/src/auth/backend/classic.rs
+++ b/proxy/src/auth/backend/classic.rs
@@ -51,7 +51,7 @@ pub(super) async fn authenticate(
                 sasl::Outcome::Success(key) => key,
                 sasl::Outcome::Failure(reason) => {
                     info!("auth backend failed with an error: {reason}");
-                    return Err(auth::AuthError::auth_failed(&*creds.user));
+                    return Err(auth::AuthError::password_failed(&*creds.user));
                 }
             };
 
diff --git a/proxy/src/auth/backend/hacks.rs b/proxy/src/auth/backend/hacks.rs
index 28bdacd76996..1411d908a5ee 100644
--- a/proxy/src/auth/backend/hacks.rs
+++ b/proxy/src/auth/backend/hacks.rs
@@ -46,7 +46,7 @@ pub(crate) async fn authenticate_cleartext(
         sasl::Outcome::Success(key) => key,
         sasl::Outcome::Failure(reason) => {
             info!("auth backend failed with an error: {reason}");
-            return Err(auth::AuthError::auth_failed(&*info.user));
+            return Err(auth::AuthError::password_failed(&*info.user));
         }
     };
 
diff --git a/proxy/src/auth/backend/mod.rs b/proxy/src/auth/backend/mod.rs
index 17334b9cbb8f..0eb68e64123a 100644
--- a/proxy/src/auth/backend/mod.rs
+++ b/proxy/src/auth/backend/mod.rs
@@ -349,7 +349,7 @@ async fn auth_quirks(
     {
         Ok(keys) => Ok(keys),
         Err(e) => {
-            if e.is_auth_failed() {
+            if e.is_password_failed() {
                 // The password could have been changed, so we invalidate the cache.
                 cached_entry.invalidate();
             }
@@ -376,7 +376,7 @@ async fn authenticate_with_secret(
             crate::sasl::Outcome::Success(key) => key,
             crate::sasl::Outcome::Failure(reason) => {
                 info!("auth backend failed with an error: {reason}");
-                return Err(auth::AuthError::auth_failed(&*info.user));
+                return Err(auth::AuthError::password_failed(&*info.user));
             }
         };
 
diff --git a/proxy/src/auth/mod.rs b/proxy/src/auth/mod.rs
index 7a373dd8251a..2bd7a2da3d29 100644
--- a/proxy/src/auth/mod.rs
+++ b/proxy/src/auth/mod.rs
@@ -21,6 +21,7 @@ pub(crate) use flow::*;
 use thiserror::Error;
 use tokio::time::error::Elapsed;
 
+use crate::auth::backend::jwt::JwtError;
 use crate::control_plane;
 use crate::error::{ReportableError, UserFacingError};
 
@@ -55,7 +56,7 @@ pub(crate) enum AuthError {
     MissingEndpointName,
 
     #[error("password authentication failed for user '{0}'")]
-    AuthFailed(Box<str>),
+    PasswordFailed(Box<str>),
 
     /// Errors produced by e.g. [`crate::stream::PqStream`].
     #[error(transparent)]
@@ -76,6 +77,9 @@ pub(crate) enum AuthError {
 
     #[error("Disconnected due to inactivity after {0}.")]
     ConfirmationTimeout(humantime::Duration),
+
+    #[error(transparent)]
+    Jwt(#[from] JwtError),
 }
 
 impl AuthError {
@@ -83,8 +87,8 @@ impl AuthError {
         AuthError::BadAuthMethod(name.into())
     }
 
-    pub(crate) fn auth_failed(user: impl Into<Box<str>>) -> Self {
-        AuthError::AuthFailed(user.into())
+    pub(crate) fn password_failed(user: impl Into<Box<str>>) -> Self {
+        AuthError::PasswordFailed(user.into())
     }
 
     pub(crate) fn ip_address_not_allowed(ip: IpAddr) -> Self {
@@ -95,8 +99,8 @@ impl AuthError {
         AuthError::TooManyConnections
     }
 
-    pub(crate) fn is_auth_failed(&self) -> bool {
-        matches!(self, AuthError::AuthFailed(_))
+    pub(crate) fn is_password_failed(&self) -> bool {
+        matches!(self, AuthError::PasswordFailed(_))
     }
 
     pub(crate) fn user_timeout(elapsed: Elapsed) -> Self {
@@ -114,7 +118,7 @@ impl UserFacingError for AuthError {
             Self::Web(e) => e.to_string_client(),
             Self::GetAuthInfo(e) => e.to_string_client(),
             Self::Sasl(e) => e.to_string_client(),
-            Self::AuthFailed(_) => self.to_string(),
+            Self::PasswordFailed(_) => self.to_string(),
             Self::BadAuthMethod(_) => self.to_string(),
             Self::MalformedPassword(_) => self.to_string(),
             Self::MissingEndpointName => self.to_string(),
@@ -123,6 +127,7 @@ impl UserFacingError for AuthError {
             Self::TooManyConnections => self.to_string(),
             Self::UserTimeout(_) => self.to_string(),
             Self::ConfirmationTimeout(_) => self.to_string(),
+            Self::Jwt(_) => self.to_string(),
         }
     }
 }
@@ -133,7 +138,7 @@ impl ReportableError for AuthError {
             Self::Web(e) => e.get_error_kind(),
             Self::GetAuthInfo(e) => e.get_error_kind(),
             Self::Sasl(e) => e.get_error_kind(),
-            Self::AuthFailed(_) => crate::error::ErrorKind::User,
+            Self::PasswordFailed(_) => crate::error::ErrorKind::User,
             Self::BadAuthMethod(_) => crate::error::ErrorKind::User,
             Self::MalformedPassword(_) => crate::error::ErrorKind::User,
             Self::MissingEndpointName => crate::error::ErrorKind::User,
@@ -142,6 +147,7 @@ impl ReportableError for AuthError {
             Self::TooManyConnections => crate::error::ErrorKind::RateLimit,
             Self::UserTimeout(_) => crate::error::ErrorKind::User,
             Self::ConfirmationTimeout(_) => crate::error::ErrorKind::User,
+            Self::Jwt(_) => crate::error::ErrorKind::User,
         }
     }
 }
diff --git a/proxy/src/serverless/backend.rs b/proxy/src/serverless/backend.rs
index 07e0e3014864..c89e0f0232d8 100644
--- a/proxy/src/serverless/backend.rs
+++ b/proxy/src/serverless/backend.rs
@@ -81,7 +81,7 @@ impl PoolingBackend {
             None => {
                 // If we don't have an authentication secret, for the http flow we can just return an error.
                 info!("authentication info not found");
-                return Err(AuthError::auth_failed(&*user_info.user));
+                return Err(AuthError::password_failed(&*user_info.user));
             }
         };
         let ep = EndpointIdInt::from(&user_info.endpoint);
@@ -99,7 +99,7 @@ impl PoolingBackend {
             }
             crate::sasl::Outcome::Failure(reason) => {
                 info!("auth backend failed with an error: {reason}");
-                Err(AuthError::auth_failed(&*user_info.user))
+                Err(AuthError::password_failed(&*user_info.user))
             }
         };
         res.map(|key| ComputeCredentials {
@@ -126,8 +126,7 @@ impl PoolingBackend {
                         &**console,
                         &jwt,
                     )
-                    .await
-                    .map_err(|e| AuthError::auth_failed(e.to_string()))?;
+                    .await?;
 
                 Ok(ComputeCredentials {
                     info: user_info.clone(),
@@ -146,8 +145,7 @@ impl PoolingBackend {
                         &StaticAuthRules,
                         &jwt,
                     )
-                    .await
-                    .map_err(|e| AuthError::auth_failed(e.to_string()))?;
+                    .await?;
 
                 Ok(ComputeCredentials {
                     info: user_info.clone(),