diff --git a/base-action/action.yml b/base-action/action.yml
index a0b5bc8..fa1bd2f 100644
--- a/base-action/action.yml
+++ b/base-action/action.yml
@@ -73,7 +73,7 @@ inputs:
     default: ""
   json_schema:
     description: |
-      JSON schema for structured output validation.  Claude must return JSON matching this schema 
+      JSON schema for structured output validation. Claude must return JSON matching this schema 
       or the action will fail. Outputs are automatically set for each field.
 
       Access outputs via: steps.<step-id>.outputs.<field_name>
@@ -81,8 +81,7 @@ inputs:
       Limitations:
       - Field names must start with letter or underscore (A-Z, a-z, _)
       - Special characters in field names are replaced with underscores
-      - Each output is limited to 1MB (values will be truncated)
-      - Objects and arrays are JSON stringified
+      - Each output is limited to 1MB
     required: false
     default: ""
 
diff --git a/base-action/src/index.ts b/base-action/src/index.ts
index 5efb18b..d6c7903 100644
--- a/base-action/src/index.ts
+++ b/base-action/src/index.ts
@@ -36,10 +36,10 @@ async function run() {
       claudeArgs += ` --allowedTools "${process.env.INPUT_ALLOWED_TOOLS}"`;
     }
 
-    // Add JSON schema if specified
+    // Add JSON schema if specified (no escaping - parseShellArgs handles it)
     if (process.env.JSON_SCHEMA) {
-      const escapedSchema = process.env.JSON_SCHEMA.replace(/'/g, "'\\''");
-      claudeArgs += ` --json-schema '${escapedSchema}'`;
+      // Wrap in single quotes for parseShellArgs
+      claudeArgs += ` --json-schema '${process.env.JSON_SCHEMA}'`;
     }
 
     await runClaude(promptConfig.path, {
diff --git a/base-action/src/run-claude.ts b/base-action/src/run-claude.ts
index 3b2bb07..e65b5fc 100644
--- a/base-action/src/run-claude.ts
+++ b/base-action/src/run-claude.ts
@@ -184,13 +184,11 @@ async function parseAndSetStructuredOutputs(
     );
 
     if (!result?.structured_output) {
-      const error = new Error(
+      throw new Error(
         `json_schema was provided but Claude did not return structured_output.\n` +
           `Found ${messages.length} messages. Result exists: ${!!result}\n` +
           `The schema may be invalid or Claude failed to call the StructuredOutput tool.`,
       );
-      core.setFailed(error.message);
-      throw error;
     }
 
     // Set GitHub Action output for each field
diff --git a/src/modes/agent/index.ts b/src/modes/agent/index.ts
index 0d15bdf..d094b57 100644
--- a/src/modes/agent/index.ts
+++ b/src/modes/agent/index.ts
@@ -7,6 +7,7 @@ import { parseAllowedTools } from "./parse-tools";
 import { configureGitAuth } from "../../github/operations/git-config";
 import type { GitHubContext } from "../../github/context";
 import { isEntityContext } from "../../github/context";
+import { appendJsonSchemaArg } from "../../utils/json-schema";
 
 /**
  * Extract GitHub context as environment variables for agent mode
@@ -150,12 +151,7 @@ export const agentMode: Mode = {
     }
 
     // Add JSON schema if provided
-    const jsonSchemaStr = process.env.JSON_SCHEMA || "";
-    if (jsonSchemaStr) {
-      // CLI validates schema - just escape for safe shell passing
-      const escapedSchema = jsonSchemaStr.replace(/'/g, "'\\''");
-      claudeArgs += ` --json-schema '${escapedSchema}'`;
-    }
+    claudeArgs = appendJsonSchemaArg(claudeArgs);
 
     // Append user's claude_args (which may have more --mcp-config flags)
     claudeArgs = `${claudeArgs} ${userClaudeArgs}`.trim();
diff --git a/src/modes/tag/index.ts b/src/modes/tag/index.ts
index 11a8e7b..a9bcae8 100644
--- a/src/modes/tag/index.ts
+++ b/src/modes/tag/index.ts
@@ -15,6 +15,7 @@ import { isEntityContext } from "../../github/context";
 import type { PreparedContext } from "../../create-prompt/types";
 import type { FetchDataResult } from "../../github/data/fetcher";
 import { parseAllowedTools } from "../agent/parse-tools";
+import { appendJsonSchemaArg } from "../../utils/json-schema";
 
 /**
  * Tag mode implementation.
@@ -178,12 +179,7 @@ export const tagMode: Mode = {
     claudeArgs += ` --allowedTools "${tagModeTools.join(",")}"`;
 
     // Add JSON schema if provided
-    const jsonSchemaStr = process.env.JSON_SCHEMA || "";
-    if (jsonSchemaStr) {
-      // CLI validates schema - just escape for safe shell passing
-      const escapedSchema = jsonSchemaStr.replace(/'/g, "'\\''");
-      claudeArgs += ` --json-schema '${escapedSchema}'`;
-    }
+    claudeArgs = appendJsonSchemaArg(claudeArgs);
 
     // Append user's claude_args (which may have more --mcp-config flags)
     if (userClaudeArgs) {
diff --git a/src/utils/json-schema.ts b/src/utils/json-schema.ts
new file mode 100644
index 0000000..5a889c7
--- /dev/null
+++ b/src/utils/json-schema.ts
@@ -0,0 +1,17 @@
+/**
+ * Appends JSON schema CLI argument if json_schema is provided
+ * Escapes schema for safe shell passing
+ */
+export function appendJsonSchemaArg(
+  claudeArgs: string,
+  jsonSchemaStr?: string,
+): string {
+  const schema = jsonSchemaStr || process.env.JSON_SCHEMA || "";
+  if (!schema) {
+    return claudeArgs;
+  }
+
+  // CLI validates schema - just escape for safe shell passing
+  const escapedSchema = schema.replace(/'/g, "'\\''");
+  return `${claudeArgs} --json-schema '${escapedSchema}'`;
+}