Negative symptoms of schizophrenia robustly predict functional outcomes but remain relatively resistant to available treatments. Better measures of negative symptoms, especially motivational deficits, are needed to better understand these symptoms and improve treatment development. Recent research shows promise in linking behavioral effort tasks to motivational negative symptoms, reward processing deficits, and defeatist attitudes, but few studies account for individual or group (patient v. control) differences in cognitive ability to perform the tasks. Individuals with poorer abilities might be less motivated to perform tasks because they find them more difficult to perform. This study used a personalized digit span task to control task difficulty while measuring task effort via pupillary responses (greater dilation indicates greater cognitive effort) at varying monetary rewards ($1 & $2). Participants with schizophrenia (N = 34) and healthy controls (N = 41) performed a digit span task with personalized max span lengths and easy (max− 2 digits) and overload (max+ 2 digits) conditions. Consistent with many studies, pupillary responses (cognitive effort) increased with greater difficulty until exceeding capacity. A similar pattern of reward responsivity was seen in both groups, such that greater reward increased dilation (effort) comparably for both groups when difficulty was within capacity. Neither patients nor controls exerted increased effort for greater reward when difficulty exceeded capacity. In patients, positive relationships were found between pupil dilation and defeatist performance beliefs if task difficulty was within capacity; a relationship that reversed if the task was too difficult. The findings demonstrate the importance of accounting for cognitive capacity and task difficulty when evaluating motivation and reward sensitivity and illustrate the utility of pupillary responses as an objective measure of effort in schizophrenia.