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.
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.
Read next: How to reduce cloud costs
Sources: AWS, “Organizing and tracking costs using AWS cost allocation tags” (opens in a new tab); AWS, “Organize Amazon EKS resources with tags” (opens in a new tab); Microsoft Learn, “Understand Cost Management data” (opens in a new tab); Microsoft Learn, “Group and allocate costs using tag inheritance” (opens in a new tab).