You can use locals to give a name to the result of any Terraform expression, and re-use that name throughout your configuration.

source (emphasis mine)

If we support locals in workspace tags, we will need to evaluate them dynamically. Storing pre-evaluated locals values in the database will most likely not have the desired effect.

Given that we also have a critical path inside wsbuilder to evaluate workspace tags, the current approach of extracting the file on-disk is not ideal when holding a database transaction. Part of this work will involve some refactoring to allow extracting the tags in-memory.

Parsing terraform template/workspace tags should support local and some basic builtin functions #15977

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Parsing terraform template/workspace tags should support `local` and some basic builtin functions #15977