Can I modify or delete one of my steam friends group tags?

So far, it sounds like it's a missing feature.

Tagging seems to be working just like game categories, so no editing unfortunately. Source

It's not possible to modify a tag, and the only way to delete it is to untag everyone.

Just untag all the friends from the group you want to remove, and the group will disappear (once it has no friends listed). Source

I don't think it is possible to immediately rename the tag itself.

I believe the easiest option is to create a new tag and tag all the users of your previous tag, then untag your friends from the old tag.

I don't think there is a way to select multiple friends at once.

Probably it's just wishful thinking but maybe you can edit tags in one of the steam files. I an NOT SURE if this is actually possible though. A quick glance through the files doesn't show anything useful.