diff --git a/src/select.js b/src/select.js
index 4cc483dd5..d08a7ce3b 100644
--- a/src/select.js
+++ b/src/select.js
@@ -393,7 +393,7 @@
             if ( ctrl.taggingLabel === false ) {
               if ( ctrl.activeIndex < 0 ) {
                 item = ctrl.tagging.fct !== undefined ? ctrl.tagging.fct(ctrl.search) : ctrl.search;
-                if ( angular.equals( ctrl.items[0], item ) ) {
+                if (!item || angular.equals( ctrl.items[0], item ) ) {
                   return;
                 }
               } else {
@@ -412,6 +412,7 @@
                 // use tagging function if we have one
                 if ( ctrl.tagging.fct !== undefined && typeof item === 'string' ) {
                   item = ctrl.tagging.fct(ctrl.search);
+                  if (!item) return;
                 // if item type is 'string', apply the tagging label
                 } else if ( typeof item === 'string' ) {
                   // trim the trailing space
@@ -675,7 +676,7 @@
                 if ( ctrl.tagging.fct ) {
                   newItem = ctrl.tagging.fct( newItem );
                 }
-                ctrl.select( newItem, true);
+                if (newItem) ctrl.select(newItem, true);
               });
             }
           }
@@ -758,6 +759,7 @@
           if ( stashArr.filter( function (origItem) { return angular.equals( origItem, ctrl.tagging.fct(ctrl.search) ); } ).length > 0 ) {
             return;
           }
+          newItem.isTag = true;
         // handle newItem string and stripping dupes in tagging string context
         } else {
           // find any tagging items already in the ctrl.items array and store them
diff --git a/test/select.spec.js b/test/select.spec.js
index 4a8482576..8be66afa8 100644
--- a/test/select.spec.js
+++ b/test/select.spec.js
@@ -317,6 +317,21 @@ describe('ui-select tests', function() {
     expect(isDropdownOpened(el3)).toEqual(true);
   });
 
+  it('should allow decline tags when tagging function returns null', function() {
+    scope.taggingFunc = function (name) {
+      return null;
+    };
+
+    var el = createUiSelect({tagging: 'taggingFunc'});
+    clickMatch(el);
+
+    $(el).scope().$select.search = 'idontexist';
+    $(el).scope().$select.activeIndex = 0;
+    $(el).scope().$select.select('idontexist');
+
+    expect($(el).scope().$select.selected).not.toBeDefined();
+  });
+
   it('should allow tagging if the attribute says so', function() {
     var el = createUiSelect({tagging: true});
     clickMatch(el);