diff --git a/sparsify/sparse_coder.py b/sparsify/sparse_coder.py
index 4e4408a5..1e8ef720 100644
--- a/sparsify/sparse_coder.py
+++ b/sparsify/sparse_coder.py
@@ -243,8 +243,11 @@ def forward(
             auxk_acts, auxk_indices = auxk_latents.topk(k_aux, sorted=False)
 
             # Encourage the top ~50% of dead latents to predict the residual of the
-            # top k living latents
-            e_hat = self.decode(auxk_acts, auxk_indices)
+            # top k living latents. We call decoder_impl directly rather than
+            # self.decode because the residual target e already accounts for b_dec
+            # (sae_out includes it), so adding b_dec again here would double-count it.
+            assert self.W_dec is not None, "Decoder weight was not initialized."
+            e_hat = decoder_impl(auxk_indices, auxk_acts.to(self.dtype), self.W_dec.mT)
             auxk_loss = (e_hat - e.detach()).pow(2).sum()
             auxk_loss = scale * auxk_loss / total_variance
         else:
diff --git a/tests/test_auxk_loss.py b/tests/test_auxk_loss.py
new file mode 100644
index 00000000..71b58bcd
--- /dev/null
+++ b/tests/test_auxk_loss.py
@@ -0,0 +1,61 @@
+import torch
+
+from sparsify import SparseCoder, SparseCoderConfig
+from sparsify.utils import decoder_impl
+
+
+def test_auxk_loss_does_not_double_count_b_dec():
+    """The AuxK loss target ``e = y - sae_out`` already accounts for ``b_dec``
+    (since ``sae_out`` includes it), so the second decoder pass used to compute
+    ``e_hat`` must *not* add ``b_dec`` again. See issue #132.
+
+    This runs on CPU using the eager decoder fallback, so it requires no GPU.
+    """
+    torch.manual_seed(0)
+
+    d_in = 16
+    num_latents = 32
+    k = 4
+    batch = 8
+
+    sae = SparseCoder(
+        d_in,
+        SparseCoderConfig(num_latents=num_latents, k=k),
+    )
+
+    # Give b_dec a nonzero value; this is the normal case after init centers it
+    # on the data mean, and is exactly the situation the bug affects.
+    with torch.no_grad():
+        sae.b_dec.copy_(torch.randn(d_in))
+
+    x = torch.randn(batch, d_in)
+    dead_mask = torch.ones(num_latents, dtype=torch.bool)
+
+    out = sae(x, dead_mask=dead_mask)
+
+    # Recompute the AuxK loss by hand, decoding *without* re-adding b_dec.
+    top_acts, top_indices, pre_acts = sae.encode(x)
+    sae_out = sae.decode(top_acts, top_indices)
+    e = x - sae_out
+    total_variance = (x - x.mean(0)).pow(2).sum()
+
+    num_dead = int(dead_mask.sum())
+    k_aux = x.shape[-1] // 2
+    scale = min(num_dead / k_aux, 1.0)
+    k_aux = min(k_aux, num_dead)
+
+    auxk_latents = torch.where(dead_mask[None], pre_acts, -torch.inf)
+    auxk_acts, auxk_indices = auxk_latents.topk(k_aux, sorted=False)
+
+    # Correct target: decode without adding b_dec a second time.
+    assert sae.W_dec is not None
+    e_hat = decoder_impl(auxk_indices, auxk_acts.to(sae.dtype), sae.W_dec.mT)
+    expected_auxk_loss = scale * (e_hat - e.detach()).pow(2).sum() / total_variance
+
+    torch.testing.assert_close(out.auxk_loss, expected_auxk_loss)
+
+    # Sanity check: the buggy formulation (re-adding b_dec) gives a *different*
+    # value when b_dec != 0, so this test would actually fail without the fix.
+    buggy_e_hat = e_hat + sae.b_dec
+    buggy_auxk_loss = scale * (buggy_e_hat - e.detach()).pow(2).sum() / total_variance
+    assert not torch.allclose(out.auxk_loss, buggy_auxk_loss)