diff --git a/CHANGELOG.md b/CHANGELOG.md
index fd948e20c..84f58dbc7 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,9 @@
 ## dbt-databricks 1.11.3 (TBD)
 
+### Fixes
+
+- Truncate (128 charactesr max) and escape special characters for default query tag values
+
 ## dbt-databricks 1.11.2 (Nov 18, 2025)
 
 ### Fixes
diff --git a/dbt/adapters/databricks/utils.py b/dbt/adapters/databricks/utils.py
index 2abaf104b..1eb5b918d 100644
--- a/dbt/adapters/databricks/utils.py
+++ b/dbt/adapters/databricks/utils.py
@@ -142,6 +142,20 @@ def parse_query_tags(query_tags_str: Optional[str]) -> dict[str, str]:
         except json.JSONDecodeError as e:
             raise DbtValidationError(f"Invalid JSON in query_tags: {e}")
 
+    @staticmethod
+    def escape_tag_value(key: str, value: str, source: str = "") -> str:
+        """Escape special characters in tag values (backslash, comma, colon)."""
+        source_prefix = f"{source}: " if source else ""
+
+        if re.search(r"[\\,:]", value):
+            logger.warning(
+                f"{source_prefix}Query tag value for key '{key}' contains unescaped "
+                f"character(s): {value}. Escaping..."
+            )
+            value = value.replace("\\", r"\\").replace(",", r"\,").replace(":", r"\:")
+
+        return value
+
     @staticmethod
     def validate_query_tags(tags: dict[str, str], source: str = "") -> None:
         """Validate query tags for reserved keys and limits."""
@@ -156,17 +170,11 @@ def validate_query_tags(tags: dict[str, str], source: str = "") -> None:
                 f"Reserved keys are: {', '.join(sorted(QueryTagsUtils.RESERVED_KEYS))}"
             )
 
-        # Escape commas, colons, and backslashes in tag values
+        # Escape values (modifies dict in place)
         for key in tags.keys():
-            value = tags[key]
-            if re.search(r"[\\,:]", value):
-                logger.warning(
-                    f"{source_prefix}Query tag value for key '{key}' contains unescaped "
-                    f"character(s): {value}. Escaping..."
-                )
-                tags[key] = value.replace("\\", "\\\\").replace(",", "\\,").replace(":", "\\:")
+            tags[key] = QueryTagsUtils.escape_tag_value(key, tags[key], source)
 
-        # Validate that no tag value exceeds 128 characters
+        # Validate that no tag value exceeds 128 characters (after escaping)
         long_values = {k: v for k, v in tags.items() if len(v) > 128}
         if long_values:
             raise DbtValidationError(
@@ -181,6 +189,28 @@ def validate_query_tags(tags: dict[str, str], source: str = "") -> None:
                 f"Maximum allowed is {QueryTagsUtils.MAX_TAGS}"
             )
 
+    @staticmethod
+    def process_default_tags(tags: dict[str, str]) -> dict[str, str]:
+        """
+        Process default tags: truncate long values, then escape special characters.
+
+        Note: We truncate BEFORE escaping to avoid cutting escape sequences in half,
+        which would create invalid sequences that can't be deserialized.
+        """
+        processed = {}
+        for key, value in tags.items():
+            if len(value) > 128:
+                logger.debug(
+                    f"Default tags: Query tag value for key '{key}' exceeds 128 characters "
+                    f"({len(value)} chars). Truncating to 128 characters."
+                )
+                value = value[:128]
+
+            escaped_value = QueryTagsUtils.escape_tag_value(key, value, "Default tags")
+            processed[key] = escaped_value
+
+        return processed
+
     @staticmethod
     def merge_query_tags(
         connection_tags: dict[str, str],
@@ -191,23 +221,20 @@ def merge_query_tags(
         Merge query tags with precedence: model > connection > default.
         Validates that no reserved keys are used and tag limits are respected.
         """
-        # All sources are now already parsed dicts
-        conn_tags = connection_tags
-        model_tags_dict = model_tags
-        default_tags_dict = default_tags
+        # Process default tags (escape and truncate, don't validate reserved keys)
+        processed_default_tags = QueryTagsUtils.process_default_tags(default_tags)
 
-        # Validate each source (user-provided tags cannot use reserved keys)
-        QueryTagsUtils.validate_query_tags(conn_tags, "Connection config")
-        QueryTagsUtils.validate_query_tags(model_tags_dict, "Model config")
+        # Validate user-provided tags (cannot use reserved keys)
+        QueryTagsUtils.validate_query_tags(connection_tags, "Connection config")
+        QueryTagsUtils.validate_query_tags(model_tags, "Model config")
 
         # Merge with precedence: model > connection > default
         merged = {}
-        merged.update(default_tags_dict)
-        merged.update(conn_tags)
-        merged.update(model_tags_dict)
+        merged.update(processed_default_tags)
+        merged.update(connection_tags)
+        merged.update(model_tags)
 
-        # Final validation of merged tags (only check total count, not reserved keys
-        # since default tags are allowed to use reserved keys)
+        # Final validation of merged tags (only check total count)
         if len(merged) > QueryTagsUtils.MAX_TAGS:
             raise DbtValidationError(
                 f"Too many total query tags ({len(merged)}). "
diff --git a/tests/unit/test_query_tags.py b/tests/unit/test_query_tags.py
index 58e4ae3d9..a74f04fbd 100644
--- a/tests/unit/test_query_tags.py
+++ b/tests/unit/test_query_tags.py
@@ -88,25 +88,25 @@ def test_validate_query_tags_escapes_comma(self):
         """Test that commas in tag values are escaped."""
         tags = {"team": "marketing,sales"}
         QueryTagsUtils.validate_query_tags(tags)
-        assert tags["team"] == "marketing\\,sales"
+        assert tags["team"] == r"marketing\,sales"
 
     def test_validate_query_tags_escapes_colon(self):
         """Test that colons in tag values are escaped."""
         tags = {"description": "project:alpha"}
         QueryTagsUtils.validate_query_tags(tags)
-        assert tags["description"] == "project\\:alpha"
+        assert tags["description"] == r"project\:alpha"
 
     def test_validate_query_tags_escapes_backslash(self):
         """Test that backslashes in tag values are escaped."""
-        tags = {"path": "folder\\subfolder"}
+        tags = {"path": r"folder\subfolder"}
         QueryTagsUtils.validate_query_tags(tags)
-        assert tags["path"] == "folder\\\\subfolder"
+        assert tags["path"] == r"folder\\subfolder"
 
     def test_validate_query_tags_escapes_multiple_special_chars(self):
         """Test that multiple special characters are all escaped."""
-        tags = {"complex": "value:with,comma\\and\\backslash"}
+        tags = {"complex": r"value:with,comma\and\backslash"}
         QueryTagsUtils.validate_query_tags(tags)
-        assert tags["complex"] == "value\\:with\\,comma\\\\and\\\\backslash"
+        assert tags["complex"] == r"value\:with\,comma\\and\\backslash"
 
     def test_validate_query_tags_multiple_values_too_long(self):
         tags = {
@@ -138,6 +138,79 @@ def test_validate_query_tags_value_after_escaping_too_long(self):
         with pytest.raises(DbtValidationError, match=expected_msg):
             QueryTagsUtils.validate_query_tags(tags)
 
+    def test_process_default_tags_escapes_special_chars(self):
+        """Test that process_default_tags escapes special characters."""
+        tags = {
+            "key1": "value:with:colons",
+            "key2": "value,with,commas",
+            "key3": r"value\with\backslashes",
+            "key4": r"path\to:file,v1",
+            "key5": r"a\b:c,d\e:f,g",
+            "key6": r"start\,middle:,end",
+        }
+        result = QueryTagsUtils.process_default_tags(tags)
+
+        assert result["key1"] == r"value\:with\:colons"
+        assert result["key2"] == r"value\,with\,commas"
+        assert result["key3"] == r"value\\with\\backslashes"
+        assert result["key4"] == r"path\\to\:file\,v1"
+        assert result["key5"] == r"a\\b\:c\,d\\e\:f\,g"
+        assert result["key6"] == r"start\\\,middle\:\,end"
+
+    def test_process_default_tags_truncates_long_values(self):
+        """Test that process_default_tags truncates values exceeding 128 characters."""
+        long_value = "x" * 150
+        tags = {"long_key": long_value}
+
+        result = QueryTagsUtils.process_default_tags(tags)
+
+        # Should be truncated to 128 characters
+        assert len(result["long_key"]) == 128
+        assert result["long_key"] == "x" * 128
+
+    def test_process_default_tags_truncates_before_escaping(self):
+        """Test that truncation happens before escaping to avoid cutting escape sequences."""
+        # Create a value longer than 128 chars that contains special characters
+        # 126 x's + 3 colons = 129 chars (exceeds limit)
+        value = "x" * 126 + ":::"
+        tags = {"key": value}
+
+        result = QueryTagsUtils.process_default_tags(tags)
+
+        # Should truncate to 128 first (removing 1 char): "xxx...xxx::"
+        # Then escape the remaining colons: "xxx...xxx\:\:"
+        # Result: 126 x's + 4 chars from escaped colons = 130 chars (longer than 128, but safe)
+        assert len(result["key"]) == 130
+        assert result["key"] == ("x" * 126 + r"\:\:")
+
+    def test_process_default_tags_truncation_avoids_broken_escapes(self):
+        """Test that truncating before escaping avoids creating invalid escape sequences."""
+        # If we truncated after escaping, we could cut "value\," to "value\"
+        # which would be an invalid/incomplete escape sequence
+        value = "x" * 127 + ","  # 128 chars exactly
+        tags = {"key": value}
+
+        result = QueryTagsUtils.process_default_tags(tags)
+
+        # Should keep all 128 chars, then escape the comma: 127 x's + r"\," (2 chars) = 129 chars
+        assert len(result["key"]) == 129
+        assert result["key"] == ("x" * 127 + r"\,")
+
+    def test_process_default_tags_allows_reserved_keys(self):
+        """Test that process_default_tags allows reserved keys (unlike validate_query_tags)."""
+        tags = {
+            "@@dbt_model_name": "test_model",
+            "@@dbt_core_version": "1.5.0",
+            "custom_tag": "value",
+        }
+
+        # Should not raise error even with reserved keys
+        result = QueryTagsUtils.process_default_tags(tags)
+
+        assert result["@@dbt_model_name"] == "test_model"
+        assert result["@@dbt_core_version"] == "1.5.0"
+        assert result["custom_tag"] == "value"
+
     def test_merge_query_tags_precedence(self):
         """Test that model tags override connection tags."""
         connection_tags = {"team": "marketing", "cost_center": "3000"}