Workaround: How to 'Delete A Category' in the People tab in New Outlook

I have just discovered this issue as well.  I have just migrated my business from Google Workspace to Office 365 and was stumped after importing our contacts into Outlook (web) that I could not find in any way to edit Categories or delete them.  This is very frustrating as I would like to use this feature as easily as I could in google.  That is, add and remove categories, colour code them and assign to the correct people as it is a very handy thing to have.

It seems in Dec 2024 that I am stuck with categories that I no longer need or want and I can't change any of the existing ones.

Please Microsoft, this is basic functionality and for people migrating over from another service provider this is disappointing to have ran into this issue so early in the journey.  On the whole it's been pretty positive but theres some strange errors like this that take the shine off the experience.