LearnGlossary

What are cost allocation tags?

Updated 26 October 2026 · Published by Zoorik

Cost allocation tags are labels on cloud resources that let cost reports split your cloud cost by team, app or environment. Each tag is a key and a value.

Which tags each resource must carry is your cloud tagging strategy.

Cost allocation tags on AWS, Azure and EKS

  • AWS cost allocation tags are user-defined tags you create, or AWS-generated tags such as aws:createdBy. Each one shows in Cost Explorer only after you activate it in the Billing and Cost Management console. In AWS Organizations, only the management account can activate tags.
  • For Azure cost allocation tags, Microsoft Cost Management reads the tags on each usage record. Resource group and subscription tags reach them only with tag inheritance on.
  • On Amazon Elastic Kubernetes Service (EKS), AWS adds aws:eks:cluster-name to each EC2 instance (virtual machine) in a cluster. Once active, this EKS cost allocation tag splits instance cost by cluster, not control plane cost.
AWS tags reach cost reports once activated. Azure reads the tags on each usage record. Illustration with no amounts, in three rows. AWS: a box, User-defined or AWS-generated tag, has an arrow labelled activate, in the Billing and Cost Management console, to a box, Cost Explorer. Azure: a box, Tag on the resource, has an arrow labelled on each usage record to a box, Microsoft Cost Management. A dashed arrow from a box, Resource group and subscription tags, joins that arrow, labelled only with tag inheritance on. EKS: a box, EC2 instance in a cluster, tag aws:eks:cluster-name added by AWS, has an arrow labelled activate to a box, Instance cost by cluster. A dashed grey box under it reads Control plane cost not split by this tag. AWS tags reach cost reports once activated. Azure reads the tags on each usage record. AWSUser-defined orAWS-generated tagactivatein the Billing and Cost Management consoleCost ExplorerAzureTag on the resourceon each usage recordMicrosoft CostManagementResource group andsubscription tagsonly with tag inheritance onEKSEC2 instance in a clusteraws:eks:cluster-nameadded by AWSactivateInstance costby clusterControl plane costnot split by this tag
Illustration, with no amounts: the step a tag passes on AWS, Azure and EKS before its cost report can split spend by it.

A tag on a shared Azure Kubernetes Service (AKS) or EKS node can’t split its cost between pods. Kubernetes cost allocation can.

Why it matters for your cloud cost

  • The purpose of cost allocation tags is to show who owns your node, virtual machine (VM) and disk spend. Tags alone don’t reduce it.
  • Coral rebalances CPU and memory requests on AKS and EKS to match real use. It drains spare nodes so your autoscaler can remove them.
  • Amoeba moves a VM’s data disks onto one pool sized to your data, then rightsizes it.
  • The free assessment works out your own figure.

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