diff --git a/litellm/proxy/_types.py b/litellm/proxy/_types.py
index 008fdd0d50b..5e3ea4b7dcb 100644
--- a/litellm/proxy/_types.py
+++ b/litellm/proxy/_types.py
@@ -2422,6 +2422,16 @@ class ConfigGeneralSettings(LiteLLMPydanticObjectBase):
             "is active as a reminder that hard enforcement is relaxed."
         ),
     )
+    skip_user_budget_on_team_key: bool | None = Field(
+        None,
+        description=(
+            "If True, restores the legacy behavior where a user's personal "
+            "max_budget is NOT enforced when their key belongs to a team; only "
+            "the team (and team-member) budgets apply. Defaults to False, meaning "
+            "the user's personal max_budget is always enforced regardless of "
+            "whether the key belongs to a team (see GitHub issue #12905)."
+        ),
+    )
     user_url_validation: Optional[bool] = Field(
         None,
         description=(
diff --git a/litellm/proxy/auth/auth_checks.py b/litellm/proxy/auth/auth_checks.py
index 93811812901..00f6d44e25a 100644
--- a/litellm/proxy/auth/auth_checks.py
+++ b/litellm/proxy/auth/auth_checks.py
@@ -626,26 +626,29 @@ async def common_checks(
             )
 
         async def _user_max_budget_check() -> None:
-            # 4.1 personal budget, if personal key
-            if (
-                (team_object is None or team_object.team_id is None)
-                and user_object is not None
-                and user_object.max_budget is not None
-            ):
-                from litellm.proxy.proxy_server import get_current_spend
+            if user_object is None or user_object.max_budget is None:
+                return
+            skip_for_team = (
+                general_settings.get("skip_user_budget_on_team_key") is True
+                and team_object is not None
+                and team_object.team_id is not None
+            )
+            if skip_for_team:
+                return
+            from litellm.proxy.proxy_server import get_current_spend
 
-                user_budget = user_object.max_budget
-                user_spend = await get_current_spend(
-                    counter_key=f"spend:user:{user_object.user_id}",
-                    fallback_spend=user_object.spend or 0.0,
+            user_budget = user_object.max_budget
+            user_spend = await get_current_spend(
+                counter_key=f"spend:user:{user_object.user_id}",
+                fallback_spend=user_object.spend or 0.0,
+                max_budget=user_budget,
+            )
+            if math.isfinite(user_budget) and user_spend >= user_budget:
+                raise litellm.BudgetExceededError(
+                    current_cost=user_spend,
                     max_budget=user_budget,
+                    message=f"ExceededBudget: User={user_object.user_id} over budget. Spend={user_spend}, Budget={user_budget}",
                 )
-                if math.isfinite(user_budget) and user_spend >= user_budget:
-                    raise litellm.BudgetExceededError(
-                        current_cost=user_spend,
-                        max_budget=user_budget,
-                        message=f"ExceededBudget: User={user_object.user_id} over budget. Spend={user_spend}, Budget={user_budget}",
-                    )
 
         # Each scope reads a distinct counter key with no cross-scope ordering
         # dependency, so the per-scope Redis-first reads run concurrently instead
diff --git a/litellm/proxy/auth/user_api_key_auth.py b/litellm/proxy/auth/user_api_key_auth.py
index 2613510bd0c..744d8182715 100644
--- a/litellm/proxy/auth/user_api_key_auth.py
+++ b/litellm/proxy/auth/user_api_key_auth.py
@@ -2442,6 +2442,7 @@ async def _reserve_budget_after_common_checks(
         proxy_logging_obj=proxy_logging_obj,
         end_user_id=end_user_id,
         end_user_object=end_user_object,
+        skip_user_budget_on_team_key=general_settings.get("skip_user_budget_on_team_key") is True,
     )
 
 
diff --git a/litellm/proxy/proxy_server.py b/litellm/proxy/proxy_server.py
index 37f3d6e49e0..a0b07ece4dd 100644
--- a/litellm/proxy/proxy_server.py
+++ b/litellm/proxy/proxy_server.py
@@ -14805,6 +14805,7 @@ async def get_config_list(
         "forward_client_headers_to_llm_api": {"type": "Boolean"},
         "mcp_required_fields": {"type": "List"},
         "cancel_on_disconnect": {"type": "Boolean"},
+        "skip_user_budget_on_team_key": {"type": "Boolean"},
     }
 
     return_val = []
diff --git a/litellm/proxy/spend_tracking/budget_reservation.py b/litellm/proxy/spend_tracking/budget_reservation.py
index 38fd0d3f343..e1a093a4a48 100644
--- a/litellm/proxy/spend_tracking/budget_reservation.py
+++ b/litellm/proxy/spend_tracking/budget_reservation.py
@@ -123,6 +123,7 @@ async def reserve_budget_for_request(
     proxy_logging_obj: ProxyLogging,
     end_user_id: Optional[str] = None,
     end_user_object: Optional[Any] = None,
+    skip_user_budget_on_team_key: bool = False,
 ) -> Optional[dict]:
     if valid_token is None or not RouteChecks.is_llm_api_route(route=route):
         return None
@@ -141,6 +142,7 @@ async def reserve_budget_for_request(
         proxy_logging_obj=proxy_logging_obj,
         end_user_id=end_user_id,
         end_user_object=end_user_object,
+        skip_user_budget_on_team_key=skip_user_budget_on_team_key,
     )
     if not counters:
         return None
@@ -296,6 +298,7 @@ async def _get_budget_counters(
     proxy_logging_obj: ProxyLogging,
     end_user_id: Optional[str] = None,
     end_user_object: Optional[Any] = None,
+    skip_user_budget_on_team_key: bool = False,
 ) -> List[_BudgetCounter]:
     counters: List[_BudgetCounter] = []
 
@@ -344,8 +347,9 @@ async def _get_budget_counters(
             )
         )
 
+    is_team_key = team_object is not None and team_object.team_id is not None
     if (
-        (team_object is None or team_object.team_id is None)
+        not (is_team_key and skip_user_budget_on_team_key)
         and user_object is not None
         and user_object.user_id is not None
         and user_object.max_budget is not None
diff --git a/tests/proxy_unit_tests/test_user_api_key_auth.py b/tests/proxy_unit_tests/test_user_api_key_auth.py
index 958b028c542..5471d2668e4 100644
--- a/tests/proxy_unit_tests/test_user_api_key_auth.py
+++ b/tests/proxy_unit_tests/test_user_api_key_auth.py
@@ -219,8 +219,8 @@ async def test_aaauser_personal_budgets(key_ownership):
     """
     Set a personal budget on a user
 
-    - have it only apply when key belongs to user -> raises BudgetExceededError
-    - if key belongs to team, have key respect team budget -> allows call to go through
+    User budget is enforced regardless of key ownership (personal or team).
+    Both cases should raise BudgetExceededError when the user is over budget.
     """
     import asyncio
     import time
@@ -229,7 +229,12 @@ async def test_aaauser_personal_budgets(key_ownership):
     from starlette.datastructures import URL
     import litellm
 
-    from litellm.proxy._types import LiteLLM_UserTable, UserAPIKeyAuth
+    from litellm.proxy._types import (
+        LiteLLM_UserTable,
+        ProxyErrorTypes,
+        ProxyException,
+        UserAPIKeyAuth,
+    )
     from litellm.proxy.auth.user_api_key_auth import user_api_key_auth
     from litellm.proxy.proxy_server import hash_token, user_api_key_cache
 
@@ -273,14 +278,9 @@ async def test_aaauser_personal_budgets(key_ownership):
         == valid_token
     )
 
-    try:
+    with pytest.raises(ProxyException) as exc_info:
         await user_api_key_auth(request=request, api_key="Bearer " + user_key)
-
-        if key_ownership == "user_key":
-            pytest.fail("Expected this call to fail. User is over limit.")
-    except Exception:
-        if key_ownership == "team_key":
-            pytest.fail("Expected this call to work. Key is below team budget.")
+    assert exc_info.value.type == ProxyErrorTypes.budget_exceeded
 
 
 @pytest.mark.asyncio
diff --git a/tests/test_litellm/proxy/auth/test_auth_checks.py b/tests/test_litellm/proxy/auth/test_auth_checks.py
index 3433d7dc2d3..27f43c4948f 100644
--- a/tests/test_litellm/proxy/auth/test_auth_checks.py
+++ b/tests/test_litellm/proxy/auth/test_auth_checks.py
@@ -4445,3 +4445,85 @@ async def test_common_checks_personal_user_budget_blocks_in_gather():
                 request=MagicMock(spec=Request),
             )
     assert "User=u1" in str(over.value)
+
+
+@pytest.mark.asyncio
+async def test_user_budget_enforced_on_team_key():
+    """User budget must be enforced even when the key belongs to a team.
+
+    Previously _user_max_budget_check skipped enforcement for team keys,
+    letting a user with a $100 personal budget spend unlimited through a
+    team key. This regression test ensures that is no longer the case.
+    """
+    from fastapi import Request
+
+    from litellm.proxy.auth.auth_checks import common_checks
+
+    user = LiteLLM_UserTable(user_id="u1", spend=0.0, max_budget=100.0)
+    team = LiteLLM_TeamTable(team_id="t1", max_budget=2100.0)
+    token = UserAPIKeyAuth(token="k1", user_id="u1", team_id="t1")
+
+    async def _spend_by_counter(counter_key, fallback_spend, max_budget=None, **kwargs):
+        return 999.0 if counter_key == "spend:user:u1" else 0.0
+
+    async def _no_membership(*a, **kw):
+        return None
+
+    with patch("litellm.proxy.proxy_server.prisma_client", None), patch(
+        "litellm.proxy.proxy_server.get_current_spend", _spend_by_counter
+    ), patch("litellm.proxy.auth.auth_checks.get_team_membership", _no_membership):
+        with pytest.raises(litellm.BudgetExceededError) as over:
+            await common_checks(
+                request_body={"messages": [{"role": "user", "content": "hi"}]},
+                team_object=team,
+                user_object=user,
+                end_user_object=None,
+                global_proxy_spend=None,
+                general_settings={},
+                route="/chat/completions",
+                llm_router=None,
+                proxy_logging_obj=MagicMock(),
+                valid_token=token,
+                request=MagicMock(spec=Request),
+            )
+    assert "User=u1" in str(over.value)
+
+
+@pytest.mark.asyncio
+async def test_skip_user_budget_on_team_key_flag_restores_old_behavior():
+    """Setting skip_user_budget_on_team_key=True skips user budget for team keys.
+
+    This is the opt-in escape hatch that restores the legacy behavior where
+    user budgets were not enforced when the key belonged to a team.
+    """
+    from fastapi import Request
+
+    from litellm.proxy.auth.auth_checks import common_checks
+
+    user = LiteLLM_UserTable(user_id="u1", spend=0.0, max_budget=100.0)
+    team = LiteLLM_TeamTable(team_id="t1", max_budget=2100.0)
+    token = UserAPIKeyAuth(token="k1", user_id="u1", team_id="t1")
+
+    async def _spend_by_counter(counter_key, fallback_spend, max_budget=None, **kwargs):
+        return 999.0 if counter_key == "spend:user:u1" else 0.0
+
+    async def _no_membership(*a, **kw):
+        return None
+
+    with patch("litellm.proxy.proxy_server.prisma_client", None), patch(
+        "litellm.proxy.proxy_server.get_current_spend", _spend_by_counter
+    ), patch("litellm.proxy.auth.auth_checks.get_team_membership", _no_membership):
+        result = await common_checks(
+            request_body={"messages": [{"role": "user", "content": "hi"}]},
+            team_object=team,
+            user_object=user,
+            end_user_object=None,
+            global_proxy_spend=None,
+            general_settings={"skip_user_budget_on_team_key": True},
+            route="/chat/completions",
+            llm_router=None,
+            proxy_logging_obj=MagicMock(),
+            valid_token=token,
+            request=MagicMock(spec=Request),
+        )
+    assert result is True
diff --git a/tests/test_litellm/proxy/test_budget_reservation.py b/tests/test_litellm/proxy/test_budget_reservation.py
index 3da103683ba..540f017ee88 100644
--- a/tests/test_litellm/proxy/test_budget_reservation.py
+++ b/tests/test_litellm/proxy/test_budget_reservation.py
@@ -576,6 +576,83 @@ async def test_should_reserve_team_member_and_org_budget_counters(spend_counter_
     await release_budget_reservation(reservation)
 
 
+@pytest.mark.asyncio
+async def test_should_reserve_user_budget_counter_for_team_key(spend_counter_state):
+    """A user's personal budget must be reserved even when the key belongs to a team.
+
+    Regression for GitHub issue #12905: previously the reservation path skipped the
+    user spend counter whenever the key had a team, so a team key could overshoot the
+    user's personal max_budget under concurrency.
+    """
+    counter_cache, key_cache = spend_counter_state
+    proxy_logging_obj = ProxyLogging(user_api_key_cache=key_cache)
+    valid_token = UserAPIKeyAuth(
+        token="key-user-on-team",
+        spend=0.0,
+        user_id="user-on-team",
+        team_id="team-no-budget",
+    )
+    team_object = LiteLLM_TeamTable(team_id="team-no-budget", spend=0.0, max_budget=None)
+    user_object = LiteLLM_UserTable(user_id="user-on-team", spend=0.0, max_budget=5.0)
+
+    with patch(
+        "litellm.proxy.spend_tracking.budget_reservation.estimate_request_max_cost",
+        return_value=0.3,
+    ):
+        reservation = await reserve_budget_for_request(
+            request_body=_request_body(),
+            route="/chat/completions",
+            llm_router=None,
+            valid_token=valid_token,
+            team_object=team_object,
+            user_object=user_object,
+            prisma_client=None,
+            user_api_key_cache=key_cache,
+            proxy_logging_obj=proxy_logging_obj,
+        )
+
+    assert counter_cache.in_memory_cache.get_cache(key="spend:user:user-on-team") == pytest.approx(0.3)
+
+    await release_budget_reservation(reservation)
+
+
+@pytest.mark.asyncio
+async def test_should_skip_user_budget_counter_for_team_key_when_flag_set(spend_counter_state):
+    """skip_user_budget_on_team_key=True restores the legacy behavior where a user's
+    personal budget is not reserved for a team key."""
+    counter_cache, key_cache = spend_counter_state
+    proxy_logging_obj = ProxyLogging(user_api_key_cache=key_cache)
+    valid_token = UserAPIKeyAuth(
+        token="key-user-on-team-skip",
+        spend=0.0,
+        user_id="user-on-team-skip",
+        team_id="team-no-budget-skip",
+    )
+    team_object = LiteLLM_TeamTable(team_id="team-no-budget-skip", spend=0.0, max_budget=None)
+    user_object = LiteLLM_UserTable(user_id="user-on-team-skip", spend=0.0, max_budget=5.0)
+
+    with patch(
+        "litellm.proxy.spend_tracking.budget_reservation.estimate_request_max_cost",
+        return_value=0.3,
+    ):
+        reservation = await reserve_budget_for_request(
+            request_body=_request_body(),
+            route="/chat/completions",
+            llm_router=None,
+            valid_token=valid_token,
+            team_object=team_object,
+            user_object=user_object,
+            prisma_client=None,
+            user_api_key_cache=key_cache,
+            proxy_logging_obj=proxy_logging_obj,
+            skip_user_budget_on_team_key=True,
+        )
+
+    assert counter_cache.in_memory_cache.get_cache(key="spend:user:user-on-team-skip") is None
+
+    await release_budget_reservation(reservation)
+
+
 @pytest.mark.asyncio
 async def test_should_seed_org_counter_from_with_budget_cache(spend_counter_state):
     counter_cache, key_cache = spend_counter_state
diff --git a/tests/test_litellm/proxy/test_proxy_server.py b/tests/test_litellm/proxy/test_proxy_server.py
index 603d5cc15b7..2f0924e9192 100644
--- a/tests/test_litellm/proxy/test_proxy_server.py
+++ b/tests/test_litellm/proxy/test_proxy_server.py
@@ -8649,6 +8649,38 @@ def test_get_config_list_includes_cancel_on_disconnect(monkeypatch):
         app.dependency_overrides.clear()
 
 
+def test_get_config_list_includes_skip_user_budget_on_team_key(monkeypatch):
+    """Related to #12905: the opt-out flag must be discoverable via /config/list so
+    it renders as a Boolean toggle on the Admin UI General Settings table. This
+    requires both the ConfigGeneralSettings field and the allowed_args entry."""
+    import types
+    from unittest.mock import AsyncMock, MagicMock
+
+    from fastapi.testclient import TestClient
+
+    import litellm.proxy.proxy_server as ps
+    from litellm.proxy._types import LitellmUserRoles, UserAPIKeyAuth
+    from litellm.proxy.proxy_server import app
+
+    mock_prisma = MagicMock()
+    mock_config_table = MagicMock()
+    mock_config_table.find_first = AsyncMock(return_value=None)
+    mock_prisma.db = types.SimpleNamespace(litellm_config=mock_config_table)
+    monkeypatch.setattr(ps, "prisma_client", mock_prisma)
+    app.dependency_overrides[ps.user_api_key_auth] = lambda: UserAPIKeyAuth(
+        user_id="admin", user_role=LitellmUserRoles.PROXY_ADMIN
+    )
+    try:
+        client = TestClient(app)
+        resp = client.get("/config/list", params={"config_type": "general_settings"})
+        assert resp.status_code == 200, resp.text
+        fields = {item["field_name"]: item for item in resp.json()}
+        assert "skip_user_budget_on_team_key" in fields
+        assert fields["skip_user_budget_on_team_key"]["field_type"] == "Boolean"
+    finally:
+        app.dependency_overrides.clear()
+
+
 def test_get_config_list_includes_budget_exceeded_throttle_percentage(monkeypatch):
     """The throttle fraction is a litellm_settings scalar surfaced on the General
     Settings table as a Float field so it sits with the other global limits; it
diff --git a/ui/litellm-dashboard/src/lib/http/schema.d.ts b/ui/litellm-dashboard/src/lib/http/schema.d.ts
index 1d620e9d153..5629cd6c8d4 100644
--- a/ui/litellm-dashboard/src/lib/http/schema.d.ts
+++ b/ui/litellm-dashboard/src/lib/http/schema.d.ts
@@ -22619,6 +22619,11 @@ export interface components {
              * @description When set to True, rejects requests that contain client-side 'metadata.tags' to prevent users from influencing budgets by sending different tags. Tags can only be inherited from the API key metadata.
              */
             reject_clientside_metadata_tags?: boolean | null;
+            /**
+             * Skip User Budget On Team Key
+             * @description If True, restores the legacy behavior where a user's personal max_budget is NOT enforced when their key belongs to a team; only the team (and team-member) budgets apply. Defaults to False, meaning the user's personal max_budget is always enforced regardless of whether the key belongs to a team (see GitHub issue #12905).
+             */
+            skip_user_budget_on_team_key?: boolean | null;
             /**
              * Store Model In Db
              * @description If True, models and config are stored in and loaded from the database. Default is False.