diff --git a/src/libs/actions/Policy.ts b/src/libs/actions/Policy.ts
index 0d7a4f97a9ad..1b9aca80c987 100644
--- a/src/libs/actions/Policy.ts
+++ b/src/libs/actions/Policy.ts
@@ -2870,7 +2870,6 @@ function createPolicyTag(policyID: string, tagName: string) {
                         tags: {
                             [tagName]: {
                                 errors: ErrorUtils.getMicroSecondOnyxError('workspace.tags.genericFailureMessage'),
-                                pendingAction: null,
                             },
                         },
                     },
@@ -2887,6 +2886,36 @@ function createPolicyTag(policyID: string, tagName: string) {
     API.write(WRITE_COMMANDS.CREATE_POLICY_TAG, parameters, onyxData);
 }
 
+function clearPolicyTagErrors(policyID: string, tagName: string) {
+    const tagListName = Object.keys(allPolicyTags?.[`${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`] ?? {})[0];
+    const tag = allPolicyTags?.[`${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`]?.[tagListName].tags?.[tagName];
+    if (!tag) {
+        return;
+    }
+
+    if (tag.pendingAction === CONST.RED_BRICK_ROAD_PENDING_ACTION.ADD) {
+        Onyx.merge(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`, {
+            [tagListName]: {
+                tags: {
+                    [tagName]: null,
+                },
+            },
+        });
+        return;
+    }
+
+    Onyx.merge(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`, {
+        [tagListName]: {
+            tags: {
+                [tagName]: {
+                    errors: null,
+                    pendingAction: null,
+                },
+            },
+        },
+    });
+}
+
 function setWorkspaceRequiresCategory(policyID: string, requiresCategory: boolean) {
     const onyxData: OnyxData = {
         optimisticData: [
@@ -3651,6 +3680,7 @@ export {
     openPolicyDistanceRatesPage,
     openPolicyMoreFeaturesPage,
     createPolicyTag,
+    clearPolicyTagErrors,
     clearWorkspaceReimbursementErrors,
     deleteWorkspaceCategories,
 };
diff --git a/src/pages/workspace/tags/WorkspaceTagsPage.tsx b/src/pages/workspace/tags/WorkspaceTagsPage.tsx
index 4ea8ba669b9b..d696678c3b4c 100644
--- a/src/pages/workspace/tags/WorkspaceTagsPage.tsx
+++ b/src/pages/workspace/tags/WorkspaceTagsPage.tsx
@@ -73,6 +73,8 @@ function WorkspaceTagsPage({policyTags, route}: WorkspaceTagsPageProps) {
                         text: value.name,
                         keyForList: value.name,
                         isSelected: !!selectedTags[value.name],
+                        pendingAction: value.pendingAction,
+                        errors: value.errors ?? undefined,
                         rightElement: (
                             <View style={styles.flexRow}>
                                 <Text style={[styles.textSupporting, styles.alignSelfCenter, styles.pl2, styles.label]}>
@@ -189,6 +191,7 @@ function WorkspaceTagsPage({policyTags, route}: WorkspaceTagsPageProps) {
                             ListItem={TableListItem}
                             customListHeader={getCustomListHeader()}
                             listHeaderWrapperStyle={[styles.ph9, styles.pv3, styles.pb5]}
+                            onDismissError={(item) => Policy.clearPolicyTagErrors(route.params.policyID, item.value)}
                         />
                     )}
                 </ScreenWrapper>