diff --git a/hydra-node/src/Hydra/Chain/Direct/Tx.hs b/hydra-node/src/Hydra/Chain/Direct/Tx.hs
index ee6260c835d..e83bd16765f 100644
--- a/hydra-node/src/Hydra/Chain/Direct/Tx.hs
+++ b/hydra-node/src/Hydra/Chain/Direct/Tx.hs
@@ -370,7 +370,7 @@ decrementTx scriptRegistry vk headId headParameters (headInput, headOutput) snap
       & addInputs [(headInput, headWitness)]
       & addReferenceInputs [headScriptRef]
       -- NOTE: at this point 'utxoToDecommit' is populated
-      & addOutputs (headOutput' : map toTxContext (maybe [] toList utxoToDecommit))
+      & addOutputs (headOutput' : map toTxContext decommitOutputs)
       & addExtraRequiredSigners [verificationKeyHash vk]
  where
   headRedeemer =
@@ -385,7 +385,13 @@ decrementTx scriptRegistry vk headId headParameters (headInput, headOutput) snap
   HeadParameters{parties, contestationPeriod} = headParameters
 
   headOutput' =
-    modifyTxOutDatum (const headDatumAfter) headOutput
+    headOutput
+      & modifyTxOutDatum (const headDatumAfter)
+      & modifyTxOutValue (\v -> v <> negateValue decomittedValue)
+
+  decomittedValue = foldMap txOutValue decommitOutputs
+
+  decommitOutputs = maybe [] toList utxoToDecommit
 
   headScript = fromPlutusScript @PlutusScriptV2 Head.validatorScript
 
diff --git a/hydra-node/test/Hydra/Chain/Direct/Contract/Decrement.hs b/hydra-node/test/Hydra/Chain/Direct/Contract/Decrement.hs
index 2c16af5725c..0fb01f74fff 100644
--- a/hydra-node/test/Hydra/Chain/Direct/Contract/Decrement.hs
+++ b/hydra-node/test/Hydra/Chain/Direct/Contract/Decrement.hs
@@ -72,7 +72,7 @@ healthyDecrementTx =
   headOutput =
     mkHeadOutput testNetworkId testPolicyId (toUTxOContext $ mkTxOutDatumInline healthyDatum)
       & addParticipationTokens healthyParticipants
-      & modifyTxOutValue (<> lovelaceToValue 3_000_000)
+      & modifyTxOutValue (<> foldMap txOutValue healthyUTxO)
 
 somePartyCardanoVerificationKey :: VerificationKey PaymentKey
 somePartyCardanoVerificationKey =
@@ -185,7 +185,7 @@ genDecrementMutation (tx, utxo) =
     , SomeMutation (Just $ toErrorCode SignatureVerificationFailed) DropDecommitOutput <$> do
         ix <- choose (1, length (txOuts' tx) - 1)
         pure $ RemoveOutput (fromIntegral ix)
-    , -- TODO: fix error code and maybe dry with CollectCom
+    , -- TODO: maybe dry with CollectCom
       SomeMutation (Just $ toErrorCode HeadValueIsNotPreserved) ExtractSomeValue <$> do
         -- Remove a random asset and quantity from headOutput
         removedValue <- do
diff --git a/hydra-plutus/src/Hydra/Contract/Head.hs b/hydra-plutus/src/Hydra/Contract/Head.hs
index 192601adeb1..f2b167a7587 100644
--- a/hydra-plutus/src/Hydra/Contract/Head.hs
+++ b/hydra-plutus/src/Hydra/Contract/Head.hs
@@ -242,7 +242,7 @@ checkDecrement ctx@ScriptContext{scriptContextTxInfo = txInfo} prevParties prevS
     && checkSnapshot
     && checkSnapshotSignature
     && mustBeSignedByParticipant ctx prevHeadId
-    && mustPreserveValue
+    && mustDecreaseValue
  where
   mustNotChangeParameters =
     traceIfFalse $(errorCode ChangedParameters) $
@@ -257,9 +257,9 @@ checkDecrement ctx@ScriptContext{scriptContextTxInfo = txInfo} prevParties prevS
   checkSnapshotSignature =
     verifySnapshotSignature nextParties nextHeadId nextSnapshotNumber nextUtxoHash decommitUtxoHash signature
 
-  mustPreserveValue =
+  mustDecreaseValue =
     traceIfFalse $(errorCode HeadValueIsNotPreserved) $
-      headInValue === headOutValue
+      headInValue === headOutValue <> foldMap txOutValue decommitOutputs
 
   -- NOTE: we always assume Head output is the first one so we pick all other
   -- outputs of a decommit tx to calculate the expected hash.