diff --git a/litellm/proxy/management_helpers/utils.py b/litellm/proxy/management_helpers/utils.py
index ea19befccc6..1c4eada67fb 100644
--- a/litellm/proxy/management_helpers/utils.py
+++ b/litellm/proxy/management_helpers/utils.py
@@ -217,7 +217,7 @@ async def handle_budget_for_entity(
     )
 
     # Get all budget field names
-    budget_params: Final = LiteLLM_BudgetTable.model_fields.keys()
+    budget_params: Final = LiteLLM_BudgetTable.model_fields.keys() - {"budget_id"}
 
     # Extract budget fields from data
     _json_data: Final = _BUDGET_DATA_MAPPING.validate_python(
diff --git a/tests/integration/management/test_tag_budget_update.py b/tests/integration/management/test_tag_budget_update.py
new file mode 100644
index 00000000000..c8ce1bdc8f4
--- /dev/null
+++ b/tests/integration/management/test_tag_budget_update.py
@@ -0,0 +1,20 @@
+from typing import Final
+from uuid import uuid4
+
+from tests.integration._support.client import Gateway, object_value, string_value
+
+
+def test_tag_budget_can_be_updated_with_its_existing_budget_id(gateway: Gateway) -> None:
+    name: Final = f"integration-tag-{uuid4().hex}"
+    gateway.post("/tag/new", {"name": name, "max_budget": 10})
+    with gateway.scenario() as scenario:
+        scenario.cleanups.callback(gateway.post, "/tag/delete", {"name": name})
+        before: Final = object_value(gateway.post("/tag/info", {"names": [name]})[name])
+        budget_id: Final = string_value(object_value(before["litellm_budget_table"])["budget_id"])
+        scenario.cleanups.callback(gateway.post, "/budget/delete", {"id": budget_id})
+        response: Final = gateway.request(
+            "POST", "/tag/update", {"name": name, "budget_id": budget_id, "max_budget": 20}
+        )
+        assert response.status_code == 200, response.text
+        after: Final = object_value(gateway.post("/tag/info", {"names": [name]})[name])
+        assert object_value(after["litellm_budget_table"])["max_budget"] == 20, after
diff --git a/tests/unit/proxy/management_helpers/test_management_helpers_utils.py b/tests/unit/proxy/management_helpers/test_management_helpers_utils.py
index 644f0656c7a..640e17aa58e 100644
--- a/tests/unit/proxy/management_helpers/test_management_helpers_utils.py
+++ b/tests/unit/proxy/management_helpers/test_management_helpers_utils.py
@@ -249,6 +249,35 @@ async def test_add_new_member_links_default_team_budget_id():
     assert create_data["budget_id"] == test_default_budget_id
 
 
+@pytest.mark.asyncio
+async def test_handle_budget_for_entity_updates_with_existing_budget_id_in_request() -> None:
+    from litellm.proxy.management_helpers.utils import handle_budget_for_entity
+    from litellm.types.tag_management import TagUpdateRequest
+
+    budget_update: Final = AsyncMock()
+    prisma_client: Final = cast(
+        PrismaClient,
+        SimpleNamespace(db=SimpleNamespace(litellm_budgettable=SimpleNamespace(update=budget_update))),
+    )
+    with (
+        patch("litellm.proxy.proxy_server.prisma_client", prisma_client),
+        patch("litellm.proxy.proxy_server.litellm_proxy_admin_name", "admin"),
+    ):
+        budget_id: Final = await handle_budget_for_entity(
+            data=TagUpdateRequest(name="budget-tag", budget_id="budget-1", max_budget=20),
+            existing_budget_id="budget-1",
+            user_api_key_dict=UserAPIKeyAuth(user_id="admin"),
+            prisma_client=prisma_client,
+            litellm_proxy_admin_name="admin",
+        )
+
+    assert budget_id == "budget-1"
+    budget_update.assert_awaited_once_with(
+        where={"budget_id": "budget-1"},
+        data={"budget_id": "budget-1", "max_budget": 20.0, "updated_by": "admin"},
+    )
+
+
 @pytest.mark.parametrize(
     ("request_fields", "cleared_budget_fields", "should_update", "expected_max_budget"),
     cast(