To address the problem of how liquid level height variations within containers impact the performance of passive ultra-high frequency (UHF) RFID tags, a link budget model for passive UHF RFID systems was derived based on the electromagnetic wave propagation theory of RFID. Using the power transmission coefficient, the study analyzes how liquid-induced impedance mismatch within containers affects system performance. To validate the theoretical model, a method combining simulations and indoor experiments was employed. Through simulation and analysis, segmented models were established to describe the variation in tag response signal strength (RSSI) with changes in liquid level height for both vertical and horizontal tag orientations. In an open indoor environment, the RSSI of two tags, Alien9662 and Alien9640, was measured as the liquid level varied, covering a range from 0 mm to 140 mm to observe signal strength changes under different liquid levels. Theoretical analysis and experimental results indicate that when the liquid level rises along the bent arm of the antenna, RSSI gradually decreases with increasing liquid level height, whereas when the liquid level rises along the electric small loop, RSSI exhibits a nonlinear trend, initially increasing and then decreasing. The RSSI change patterns for both tags align with the segmented model, verifying its accuracy. These findings provide a theoretical basis for understanding the effects of liquid environments on RFID system performance and offer practical insights for tag deployment and design in real-world applications.