diff --git a/src/libs/PolicyUtils.ts b/src/libs/PolicyUtils.ts
index 0f8cfb879cac7..948ca1821c597 100644
--- a/src/libs/PolicyUtils.ts
+++ b/src/libs/PolicyUtils.ts
@@ -1156,10 +1156,10 @@ function hasDependentTags(policy: OnyxEntry<Policy>, policyTagList: OnyxEntry<Po
 }
 
 function hasIndependentTags(policy: OnyxEntry<Policy>, policyTagList: OnyxEntry<PolicyTagLists>) {
-    if (!policy?.hasMultipleTagLists) {
+    if (!policy?.hasMultipleTagLists || hasDependentTags(policy, policyTagList)) {
         return false;
     }
-    return Object.values(policyTagList ?? {}).every((tagList) => Object.values(tagList.tags).every((tag) => !tag.rules?.parentTagsFilter && !tag.parentTagsFilter));
+    return Object.values(policyTagList ?? {}).some((tagList) => Object.values(tagList.tags).length > 0);
 }
 
 /** Get the Xero organizations connected to the policy */
diff --git a/tests/unit/PolicyUtilsTest.ts b/tests/unit/PolicyUtilsTest.ts
index 2c6826a5c431d..13dd1881fd103 100644
--- a/tests/unit/PolicyUtilsTest.ts
+++ b/tests/unit/PolicyUtilsTest.ts
@@ -23,7 +23,9 @@ import {
     getTagListByOrderWeight,
     getUberConnectionErrorDirectlyFromPolicy,
     getUnitRateValue,
+    hasDependentTags,
     hasDynamicExternalWorkflow,
+    hasIndependentTags,
     hasOnlyPersonalPolicies,
     hasOtherControlWorkspaces,
     hasPolicyWithXeroConnection,
@@ -37,7 +39,7 @@ import {isWorkspaceEligibleForReportChange} from '@libs/ReportUtils';
 import CONST from '@src/CONST';
 import {getPolicyBrickRoadIndicatorStatus} from '@src/libs/PolicyUtils';
 import ONYXKEYS from '@src/ONYXKEYS';
-import type {PersonalDetailsList, Policy, PolicyEmployeeList, Report, Transaction} from '@src/types/onyx';
+import type {PersonalDetailsList, Policy, PolicyEmployeeList, PolicyTagLists, Report, Transaction} from '@src/types/onyx';
 import type {Connections} from '@src/types/onyx/Policy';
 import createCollection from '../utils/collections/createCollection';
 import createRandomPolicy from '../utils/collections/policies';
@@ -2081,4 +2083,148 @@ describe('PolicyUtils', () => {
             expect(result.size).toBe(2);
         });
     });
+
+    describe('hasDependentTags', () => {
+        it('returns false when policy has no multiple tag lists', () => {
+            const policy = {hasMultipleTagLists: false} as Policy;
+            const policyTagList: PolicyTagLists = {};
+            expect(hasDependentTags(policy, policyTagList)).toBe(false);
+        });
+
+        it('returns false when policy is undefined', () => {
+            expect(hasDependentTags(undefined, {})).toBe(false);
+        });
+
+        it('returns false when tags have no parentTagsFilter', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            const policyTagList = {
+                Department: {
+                    name: 'Department',
+                    tags: {
+                        Engineering: {name: 'Engineering', enabled: true},
+                    },
+                    required: false,
+                    orderWeight: 0,
+                },
+            } as PolicyTagLists;
+            expect(hasDependentTags(policy, policyTagList)).toBe(false);
+        });
+
+        it('returns true when a tag has rules.parentTagsFilter', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            const policyTagList = {
+                Department: {
+                    name: 'Department',
+                    tags: {
+                        Engineering: {name: 'Engineering', enabled: true, rules: {parentTagsFilter: '^California$'}},
+                    },
+                    required: false,
+                    orderWeight: 0,
+                },
+            } as PolicyTagLists;
+            expect(hasDependentTags(policy, policyTagList)).toBe(true);
+        });
+
+        it('returns true when a tag has parentTagsFilter at the top level', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            const policyTagList = {
+                Department: {
+                    name: 'Department',
+                    tags: {
+                        Engineering: {name: 'Engineering', enabled: true, parentTagsFilter: '^California$'},
+                    },
+                    required: false,
+                    orderWeight: 0,
+                },
+            } as PolicyTagLists;
+            expect(hasDependentTags(policy, policyTagList)).toBe(true);
+        });
+    });
+
+    describe('hasIndependentTags', () => {
+        it('returns false when policy has no multiple tag lists', () => {
+            const policy = {hasMultipleTagLists: false} as Policy;
+            const policyTagList: PolicyTagLists = {};
+            expect(hasIndependentTags(policy, policyTagList)).toBe(false);
+        });
+
+        it('returns false when policy is undefined', () => {
+            expect(hasIndependentTags(undefined, {})).toBe(false);
+        });
+
+        it('returns false when tags are dependent (have parentTagsFilter)', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            const policyTagList = {
+                Department: {
+                    name: 'Department',
+                    tags: {
+                        Engineering: {name: 'Engineering', enabled: true, rules: {parentTagsFilter: '^California$'}},
+                    },
+                    required: false,
+                    orderWeight: 0,
+                },
+            } as PolicyTagLists;
+            expect(hasIndependentTags(policy, policyTagList)).toBe(false);
+        });
+
+        it('returns false when all tag lists are empty', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            const policyTagList = {
+                Department: {
+                    name: 'Department',
+                    tags: {},
+                    required: false,
+                    orderWeight: 0,
+                },
+                Location: {
+                    name: 'Location',
+                    tags: {},
+                    required: false,
+                    orderWeight: 1,
+                },
+            } as PolicyTagLists;
+            expect(hasIndependentTags(policy, policyTagList)).toBe(false);
+        });
+
+        it('returns true when tags are independent and at least one tag exists', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            const policyTagList = {
+                Department: {
+                    name: 'Department',
+                    tags: {
+                        Engineering: {name: 'Engineering', enabled: true},
+                    },
+                    required: false,
+                    orderWeight: 0,
+                },
+            } as PolicyTagLists;
+            expect(hasIndependentTags(policy, policyTagList)).toBe(true);
+        });
+
+        it('returns true when at least one tag list has tags and others are empty', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            const policyTagList = {
+                Department: {
+                    name: 'Department',
+                    tags: {},
+                    required: false,
+                    orderWeight: 0,
+                },
+                Location: {
+                    name: 'Location',
+                    tags: {
+                        'New York': {name: 'New York', enabled: true},
+                    },
+                    required: false,
+                    orderWeight: 1,
+                },
+            } as PolicyTagLists;
+            expect(hasIndependentTags(policy, policyTagList)).toBe(true);
+        });
+
+        it('returns false when policyTagList is undefined', () => {
+            const policy = {hasMultipleTagLists: true} as Policy;
+            expect(hasIndependentTags(policy, undefined)).toBe(false);
+        });
+    });
 });