I have this working with a custom taxonomy. I have buttons/badges that hide and display depending on a category.
Query looks like:
Dynamic Tag -> Post Terms (then click on Post Terms and choose your Category to use, and set the separator to comma if not already, as wordpress outputs them with a comma usually)
Condition: Contains
Compare Type: Text
Conditional Value: <Category>
The value of the category text is the display value, not the slug.