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Group and allocate costs using tag inheritance

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Azure tags are widely used to group costs to align with different business units, engineering environments, and cost departments. Tags provide the visibility needed for businesses to manage and allocate costs across the different groups.

This article explains how to use the tag inheritance setting in Cost Management. When enabled, tag inheritance applies resource group and subscription tags to child resource usage records. You don't have to tag every resource or rely on resources that emit usage to have their own tags.

Tag inheritance is available for the following billing account types:

  • Enterprise Agreement (EA)
  • Microsoft Customer Agreement (MCA)
  • Microsoft Partner Agreement (MPA) with Azure plan subscriptions

Here's an example diagram showing how a tag is inherited. Note that inherited tags are applied to child resource usage records and not the resources themselves.

Example diagram showing how a tag is inherited.

Required permissions

  • For subscriptions:
    • Cost Management reader to view
    • Cost Management Contributor to edit
  • For EA billing accounts:
    • Enterprise Administrator (read-only) to view
    • Enterprise Administrator to edit
  • For MCA billing profiles:
    • Billing profile reader to view
    • Billing profile contributor to edit

Enable tag inheritance

You can enable the tag inheritance setting in the Azure portal. You apply the setting at the EA billing account, MCA billing profile, and subscription scopes. After the setting is enabled, all resource group and subscription tags are automatically applied to child resource usage records.

To enable tag inheritance in the Azure portal for an EA billing account

  1. In the Azure portal, search for Cost Management and select it (the green hexagon-shaped symbol, not Cost Management + Billing).
  2. Select a scope.
  3. In the left menu under Settings, select Configuration.
  4. Under Tag inheritance, select Edit.
    Screenshot showing the Edit option for Tag inheritance for an EA billing account.
  5. In the Tag inheritance window, select Automatically apply subscription and resource group tags to new data.
    Screenshot showing the Automatically apply subscription and resource group tags to new data option for a billing account.

To enable tag inheritance in the Azure portal for an MCA billing profile

  1. In the Azure portal, search for Cost Management and select it (the green hexagon-shaped symbol, not Cost Management + Billing).
  2. Select a scope.
  3. In the left menu under Settings, select Manage billing profile.
  4. Under Tag inheritance, select Edit.
    Screenshot showing the Edit option for Tag inheritance for an MCA billing profile.
  5. In the Tag inheritance window, select Automatically apply subscription and resource group tags to new data.
    Screenshot showing the Automatically apply subscription and resource group tags to new data option for a billing profile.

To enable tag inheritance in the Azure portal for a subscription

  1. In the Azure portal, search for Cost Management and select it (the green hexagon-shaped symbol, not Cost Management + Billing).
  2. Select a subscription scope.
  3. In the left menu under Settings, select Manage subscription.
  4. Under Tag inheritance, select Edit.
    Screenshot showing the Edit option for Tag inheritance for a subscription.
  5. In the Tag inheritance window, select Automatically apply subscription and resource group tags to new data.
    Screenshot showing the Automatically apply subscription and resource group tags to new data option for a subscription.

Choose between resource and inherited tags

When a resource tag matches the resource group or subscription tag being applied, the resource tag is applied to its usage record by default. You can change the default behavior to have the subscription or resource group tag override the resource tag.

In the Tag inheritance window, select the Use the subscription or resource group tag option.

Screenshot showing the override options.

Let's look at an example of how a resource tag gets applied. In the following diagram, resource 4 and resource group 2 have the same tag: App. Because the user chose to keep the resource tag, usage record 4 is updated with the resource tag value E2E.

Example diagram showing how a resource tag gets applied.

Let's look at another example where a resource tag gets overridden. In the following diagram, resource 4 and resource group 2 have the same tag: App. Because the user chose to use the resource group or subscription tag, usage record 4 is updated with the resource group tag value, which is backend¹.

¹ When the subscription and resource group tags are the same as the resource tag and you’ve selected the Use the subscription or resource group tag option, the subscription tag is used.

Example diagram showing how a resource tag gets overridden.

Usage record updates

After the tag inheritance setting is enabled, it takes about 8-24 hours for the child resource usage records to get updated with subscription and resource group tags. The usage records are updated for the current month using the existing subscription and resource group tags.

For example, if the tag inheritance setting is enabled on October 20, child resource usage records are updated from October 1 using the tags that existed on October 20.

Similarly, if the tag inheritance setting is disabled, the inherited tags will be removed from the usage records for the current month.

Note

If there are purchases or resources that don’t emit usage at a subscription scope, they will not have the subscription tags applied even if the setting is enabled.

View costs grouped by tags

You can use cost analysis to view the costs grouped by tags.

  1. In the Azure portal, navigate to Cost Management.
  2. In the left menu, select Cost Analysis.
  3. Select a scope.
  4. In the Group by list, select the tag you want to view costs for.

Here's an example showing costs for the org tag.

Screenshot showing costs for the org example tag.

You can also view the inherited tags by downloading your Azure usage. For more information, see View and download your Azure usage and charges.

Next steps