diff --git a/app/javascript/dashboard/components-next/Label/AddLabel.vue b/app/javascript/dashboard/components-next/Label/AddLabel.vue
new file mode 100644
index 000000000..c9571e771
--- /dev/null
+++ b/app/javascript/dashboard/components-next/Label/AddLabel.vue
@@ -0,0 +1,49 @@
+<script setup>
+import { ref } from 'vue';
+import { useI18n } from 'vue-i18n';
+
+import DropdownMenu from 'dashboard/components-next/dropdown-menu/DropdownMenu.vue';
+
+defineProps({
+  labelMenuItems: {
+    type: Array,
+    default: () => [],
+  },
+});
+
+const emit = defineEmits(['updateLabel']);
+
+const { t } = useI18n();
+
+const showDropdown = ref(false);
+</script>
+
+<template>
+  <div class="relative">
+    <button
+      class="flex items-center gap-1 px-2 py-1 rounded-md outline-dashed h-[26px] outline-1 outline-n-slate-6 hover:bg-n-alpha-2"
+      :class="{ 'bg-n-alpha-2': showDropdown }"
+      @click="showDropdown = !showDropdown"
+    >
+      <span class="i-lucide-plus" />
+      <span class="text-sm text-n-slate-11">
+        {{ t('LABEL.TAG_BUTTON') }}
+      </span>
+    </button>
+    <DropdownMenu
+      v-if="showDropdown"
+      v-on-clickaway="() => (showDropdown = false)"
+      :menu-items="labelMenuItems"
+      show-search
+      class="z-[100] w-48 mt-2 overflow-y-auto ltr:left-0 rtl:right-0 top-full max-h-52"
+      @action="emit('updateLabel', $event)"
+    >
+      <template #thumbnail="{ item }">
+        <div
+          class="rounded-sm size-2"
+          :style="{ backgroundColor: item.thumbnail.color }"
+        />
+      </template>
+    </DropdownMenu>
+  </div>
+</template>
diff --git a/app/javascript/dashboard/components-next/Label/LabelItem.vue b/app/javascript/dashboard/components-next/Label/LabelItem.vue
new file mode 100644
index 000000000..b96b9b368
--- /dev/null
+++ b/app/javascript/dashboard/components-next/Label/LabelItem.vue
@@ -0,0 +1,22 @@
+<script setup>
+defineProps({
+  label: {
+    type: Object,
+    default: null,
+  },
+});
+</script>
+
+<template>
+  <div
+    class="bg-n-alpha-2 rounded-md flex items-center h-7 w-fit py-1 ltr:pl-1 rtl:pr-1 ltr:pr-1.5 rtl:pl-1.5"
+  >
+    <div
+      class="w-2 h-2 m-1 rounded-sm"
+      :style="{ backgroundColor: label.color }"
+    />
+    <span class="text-sm text-n-slate-12">
+      {{ label.title }}
+    </span>
+  </div>
+</template>
diff --git a/app/javascript/dashboard/components-next/Label/story/AddLabel.story.vue b/app/javascript/dashboard/components-next/Label/story/AddLabel.story.vue
new file mode 100644
index 000000000..ea6466feb
--- /dev/null
+++ b/app/javascript/dashboard/components-next/Label/story/AddLabel.story.vue
@@ -0,0 +1,27 @@
+<script setup>
+import AddLabel from '../AddLabel.vue';
+import { labelMenuItems } from './fixtures';
+
+function onUpdateLabel(label) {
+  console.log('Label updated:', label);
+}
+</script>
+
+<template>
+  <Story title="Components/Label/Add Label">
+    <Variant title="Default (button with label menu items with active state)">
+      <div class="h-[300px] p-4">
+        <AddLabel
+          :label-menu-items="labelMenuItems"
+          @update-label="onUpdateLabel"
+        />
+      </div>
+    </Variant>
+
+    <Variant title="Empty List (button with empty label menu)">
+      <div class="h-[300px] p-4">
+        <AddLabel :label-menu-items="[]" @update-label="onUpdateLabel" />
+      </div>
+    </Variant>
+  </Story>
+</template>
diff --git a/app/javascript/dashboard/components-next/Label/story/Label.story.vue b/app/javascript/dashboard/components-next/Label/story/Label.story.vue
new file mode 100644
index 000000000..5319d56ae
--- /dev/null
+++ b/app/javascript/dashboard/components-next/Label/story/Label.story.vue
@@ -0,0 +1,21 @@
+<script setup>
+import Label from '../LabelItem.vue';
+import { label } from './fixtures';
+</script>
+
+<template>
+  <Story title="Components/Label/Label item">
+    <Variant title="Default">
+      <Label :label="label" />
+    </Variant>
+
+    <Variant title="Custom Label">
+      <Label
+        :label="{
+          title: 'Custom Label',
+          color: '#FF5733',
+        }"
+      />
+    </Variant>
+  </Story>
+</template>
diff --git a/app/javascript/dashboard/components-next/Label/story/fixtures.js b/app/javascript/dashboard/components-next/Label/story/fixtures.js
new file mode 100644
index 000000000..980ba8c0d
--- /dev/null
+++ b/app/javascript/dashboard/components-next/Label/story/fixtures.js
@@ -0,0 +1,62 @@
+export const label = {
+  id: 1,
+  title: 'delivery',
+  color: '#A2FDD5',
+};
+
+export const labelMenuItems = [
+  {
+    label: 'delivery',
+    value: 3,
+    thumbnail: {
+      color: '#A2FDD5',
+    },
+    isSelected: true,
+    action: 'addLabel',
+  },
+  {
+    label: 'lead',
+    value: 6,
+    thumbnail: {
+      color: '#F161C8',
+    },
+    isSelected: false,
+    action: 'addLabel',
+  },
+  {
+    label: 'ops-handover',
+    value: 4,
+    thumbnail: {
+      color: '#A53326',
+    },
+    isSelected: false,
+    action: 'addLabel',
+  },
+  {
+    label: 'billing',
+    value: 1,
+    thumbnail: {
+      color: '#28AD21',
+    },
+    isSelected: false,
+    action: 'addLabel',
+  },
+  {
+    label: 'premium-customer',
+    value: 5,
+    thumbnail: {
+      color: '#6FD4EF',
+    },
+    isSelected: false,
+    action: 'addLabel',
+  },
+  {
+    label: 'software',
+    value: 2,
+    thumbnail: {
+      color: '#8F6EF2',
+    },
+    isSelected: false,
+    action: 'addLabel',
+  },
+];
diff --git a/app/javascript/dashboard/i18n/locale/en/components.json b/app/javascript/dashboard/i18n/locale/en/components.json
index 7a0533cef..f5207fde9 100644
--- a/app/javascript/dashboard/i18n/locale/en/components.json
+++ b/app/javascript/dashboard/i18n/locale/en/components.json
@@ -30,5 +30,8 @@
   },
   "BREADCRUMB": {
     "ARIA_LABEL": "Breadcrumb"
+  },
+  "LABEL": {
+    "TAG_BUTTON": "tag"
   }
 }