Thank you for your screenshot.
Ensure that you have currently selected the writing tool (A) from the tool palette - as tool-specific controls are only visible when the associated tool is active. To find the writing tool (A), swipe the tool palette to the right or left with your finger.

Per my screenshot above, with the writing tool (A) selected, you should now see the return button - and a keyboard button.
While using scribble input to create a tag, enter # followed by the tag name - then tap the return button. Alternatively, tap the keyboard button and use this to either complete the entry, or just use the keyboard to create the tag. If experiencing difficulty, the latter may be the simplest option.
Having worked through this exercise, I might offer comment that the ability to create a tag within the Notes App, using Scribble input, is neither particularly easy nor elegant. Unless I too am missing something fundamental, we might reasonably conclude that this feature is not well developed in iPadOS 26.
One further observation, the tool palette may appear and behave slightly differently between ipad models, in particular with smaller screen devices. For this exercise, I have been using an iPad Pro M1. Your own screenshot suggests that you are using an iPad with a smaller screen - and as such, while the same tools should be available from the tool palette, for you some tools might being accessed using the more "..." button.
Apple does invite constructive feedback and comments via their product feedback pages. While not resolving your specific difficulties, you might choose to offer appropriate constructive feedback concerning tag creation using Scribble. While you are unlikely to receive a reply, it is our understanding that all feedback is logged, analysed and forwarded to the appropriate team(s).
Your might also seek additional help directly from Apple Support. You can contact the Support Team using the Support link at top-right or bottom-left of this page. Alternatively, you can initiate and manage your support cases using the excellent Apple Support App. If not already installed on your iPad, the App can be downloaded from the App Store:
https://apps.apple.com/app/apple-support/id1130498044
Feedback - iPad - Apple
If you do engage with Apple Support - and learn anything new - please return here and share any additional guidance that you receive, as this may help others.