Passive RFID tags have no internal power supply. The minute electrical current induced in the antenna by the incoming radio frequency signal provides just enough power for the chip in the tag to power up and transmit a response.

The response of a passive RFID tag is not just an ID number (UID); the tag chip can contain additional data. Lack of an onboard power supply means that the device can be quite small: commercially available products exist that can be embedded under the skin. As of 2006, the smallest of such devices measure 0.15 mm × 0.15 mm, and is thinner than a sheet of paper (7.5 micrometers).

The lowest cost EPC RFID tags, which are the chosen standard of Wal-Mart, DOD, Target, Tesco in the UK and Metro AG in Germany, are available today at a price of 8 Cent each. The addition of the antenna creates a tag that varies from the size of a postage stamp to the size of a postcard.

Passive tags have practical reading distances ranging from about 10 cm (4 in.) (ISO 14443) up to a few meters (EPC and ISO 18000-6) depending on the chosen radio frequency and antenna design/size.

The end game for most item level tagging over the next few decades is that RFID tags will be wholly printed (from polymer inks) - the same way a barcode is today - and be virtually free, like a barcode.

Semi-passive (or semi-active) tags

Semi-passive RFID tags are very similar to passive tags except for the addition of a small battery. This battery allows the tag IC to be constantly powered, which removes the need for the aerial to be designed to collect power from the incoming signal.

Aerials can therefore be optimized for the backscattering signal. Semi-passive RFID tags are thus faster in response, though less reliable and powerful than active tags. Semi-passive tags offer benefits in environments where there is a lot of metal or fluids, which typically scatter the RF field and can cause non-reads with passive tags. As semi-passive tags are pre-energized, they can be read more reliably in these more difficult environments.

Active tags

Unlike passive RFID tags, active RFID tags have their own internal power source which is used to power any ICs that generate the outgoing signal.

Active tags, due to their onboard power supply, also transmit at higher power levels than passive tags, allowing them to be more effective in 'RF challenged' environments like water (including humans/cattle, which are mostly water), metal (shipping containers, vehicles), or at longer distances.

Many active tags have practical ranges of hundreds of meters, and a battery life of up to 10 years.

Some active RFID tags include sensors such as temperature logging which have been used in concrete maturity monitoring or to monitor the temperature of perishable goods. Other sensors that have been associated with active RFID include humidity, shock/vibration, light, radiation, temperature and atmospherics like ethylene.