diff --git a/.changelog/9740.txt b/.changelog/9740.txt
new file mode 100644
index 00000000000..e3b31b81683
--- /dev/null
+++ b/.changelog/9740.txt
@@ -0,0 +1,3 @@
+```release-note:enhancement
+compute: added update support to `params.resource_manager_tags` in `google_compute_instance`
+```
diff --git a/google/services/compute/resource_compute_instance.go b/google/services/compute/resource_compute_instance.go
index 050ae0106df..1c60ed5357b 100644
--- a/google/services/compute/resource_compute_instance.go
+++ b/google/services/compute/resource_compute_instance.go
@@ -232,8 +232,8 @@ func ResourceComputeInstance() *schema.Resource {
 									"resource_manager_tags": {
 										Type:         schema.TypeMap,
 										Optional:     true,
-										AtLeastOneOf: initializeParamsKeys,
 										ForceNew:     true,
+										AtLeastOneOf: initializeParamsKeys,
 										Description:  `A map of resource manager tags. Resource manager tag keys and values have the same definition as resource manager tags. Keys must be in the format tagKeys/{tag_key_id}, and values are in the format tagValues/456. The field is ignored (both PUT & PATCH) when empty.`,
 									},
 
@@ -613,10 +613,8 @@ func ResourceComputeInstance() *schema.Resource {
 				Elem: &schema.Resource{
 					Schema: map[string]*schema.Schema{
 						"resource_manager_tags": {
-							Type:     schema.TypeMap,
-							Optional: true,
-							// This field is intentionally not updatable. The API overrides all existing tags on the field when updated.  See go/gce-tags-terraform-support for details.
-							ForceNew:    true,
+							Type:        schema.TypeMap,
+							Optional:    true,
 							Description: `A map of resource manager tags. Resource manager tag keys and values have the same definition as resource manager tags. Keys must be in the format tagKeys/{tag_key_id}, and values are in the format tagValues/456. The field is ignored (both PUT & PATCH) when empty.`,
 						},
 					},
@@ -1717,6 +1715,40 @@ func resourceComputeInstanceUpdate(d *schema.ResourceData, meta interface{}) err
 		}
 	}
 
+	if d.HasChange("params.0.resource_manager_tags") {
+		err = transport_tpg.Retry(transport_tpg.RetryOptions{
+			RetryFunc: func() error {
+				instance, err := config.NewComputeClient(userAgent).Instances.Get(project, zone, instance.Name).Do()
+				if err != nil {
+					return fmt.Errorf("Error retrieving instance: %s", err)
+				}
+
+				params, err := expandParams(d)
+				if err != nil {
+					return fmt.Errorf("Error updating params: %s", err)
+				}
+
+				instance.Params = params
+
+				op, err := config.NewComputeClient(userAgent).Instances.Update(project, zone, instance.Name, instance).Do()
+				if err != nil {
+					return fmt.Errorf("Error updating instance: %s", err)
+				}
+
+				opErr := ComputeOperationWaitTime(config, op, project, "resource_manager_tags, updating", userAgent, d.Timeout(schema.TimeoutUpdate))
+				if opErr != nil {
+					return opErr
+				}
+
+				return nil
+			},
+		})
+
+		if err != nil {
+			return err
+		}
+	}
+
 	if d.HasChange("resource_policies") {
 		if len(instance.ResourcePolicies) > 0 {
 			req := compute.InstancesRemoveResourcePoliciesRequest{ResourcePolicies: instance.ResourcePolicies}
diff --git a/google/services/compute/resource_compute_instance_test.go b/google/services/compute/resource_compute_instance_test.go
index cfacb1dba85..a349399e8b6 100644
--- a/google/services/compute/resource_compute_instance_test.go
+++ b/google/services/compute/resource_compute_instance_test.go
@@ -263,6 +263,12 @@ func TestAccComputeInstance_resourceManagerTags(t *testing.T) {
 					testAccCheckComputeInstanceExists(
 						t, "google_compute_instance.foobar", &instance)),
 			},
+			{
+				Config: testAccComputeInstance_resourceManagerTagsUpdate(context),
+				Check: resource.ComposeTestCheckFunc(
+					testAccCheckComputeInstanceExists(
+						t, "google_compute_instance.foobar", &instance)),
+			},
 		},
 	})
 }
@@ -3572,8 +3578,6 @@ resource "google_compute_instance" "foobar" {
   name           = "%{instance_name}"
   machine_type   = "e2-medium"
   zone           = "us-central1-a"
-  can_ip_forward = false
-  tags           = ["tag-key", "tag-value"]
 
   boot_disk {
     initialize_params {
@@ -3593,9 +3597,64 @@ resource "google_compute_instance" "foobar" {
   network_interface {
     network = "default"
   }
+}
+`, context)
+}
 
-  metadata = {
-    foo = "bar"
+func testAccComputeInstance_resourceManagerTagsUpdate(context map[string]interface{}) string {
+	return acctest.Nprintf(`
+resource "google_tags_tag_key" "key" {
+  parent = "projects/%{project}"
+  short_name = "foobarbaz%{random_suffix}"
+  description = "For foo/bar resources."
+}
+
+resource "google_tags_tag_value" "value" {
+  parent = "tagKeys/${google_tags_tag_key.key.name}"
+  short_name = "foo%{random_suffix}"
+  description = "For foo resources."
+}
+
+resource "google_tags_tag_key" "key_new" {
+  parent = "projects/%{project}"
+  short_name = "foobarbaznew%{random_suffix}"
+  description = "New key for foo/bar resources."
+}
+
+resource "google_tags_tag_value" "value_new" {
+  parent = "tagKeys/${google_tags_tag_key.key_new.name}"
+  short_name = "foonew%{random_suffix}"
+  description = "New value for foo resources."
+}
+
+data "google_compute_image" "my_image" {
+  family  = "debian-11"
+  project = "debian-cloud"
+}
+
+resource "google_compute_instance" "foobar" {
+  name           = "%{instance_name}"
+  machine_type   = "e2-medium"
+  zone           = "us-central1-a"
+
+  boot_disk {
+    initialize_params {
+      image = data.google_compute_image.my_image.self_link
+      resource_manager_tags = {
+        "tagKeys/${google_tags_tag_key.key.name}" = "tagValues/${google_tags_tag_value.value.name}"
+      }
+    }
+  }
+
+  params {
+    resource_manager_tags = {
+      "tagKeys/${google_tags_tag_key.key.name}"     = "tagValues/${google_tags_tag_value.value.name}"
+      "tagKeys/${google_tags_tag_key.key_new.name}" = "tagValues/${google_tags_tag_value.value_new.name}"
+    }
+  }
+
+  network_interface {
+    network = "default"
   }
 }
 `, context)