diff --git a/azd-hooks/scripts/hooks/preprovision/run_preconfig.ps1 b/azd-hooks/scripts/hooks/preprovision/run_preconfig.ps1
index 3f15d71b..3db19561 100644
--- a/azd-hooks/scripts/hooks/preprovision/run_preconfig.ps1
+++ b/azd-hooks/scripts/hooks/preprovision/run_preconfig.ps1
@@ -180,4 +180,21 @@ try {
     Write-Host "✗ Error checking RS_CONTAINER_NAME environment variable: $($_.Exception.Message)"
     Write-Host "ℹ Make sure you're in an azd environment directory"
     exit 1
+}
+
+# Set default RESOURCE_TAGS if not already set
+Write-Host "Checking RESOURCE_TAGS environment variable..."
+try {
+    $resourceTags = $env:RESOURCE_TAGS
+    if ([string]::IsNullOrWhiteSpace($resourceTags)) {
+        Write-Host "RESOURCE_TAGS not set, using default value"
+        $defaultTags = '{"name":"AZD-MCS-AZAI"}'
+        azd env set RESOURCE_TAGS $defaultTags
+        Write-Host "RESOURCE_TAGS set to default: $defaultTags"
+    } else {
+        Write-Host "RESOURCE_TAGS already set to: $resourceTags"
+    }
+} catch {
+    Write-Host "Error checking RESOURCE_TAGS: $($_.Exception.Message)"
+    # Non-fatal - Terraform will use its variable default if this fails
 }
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