This paper evaluates the performance of harmonic RFID tags in multipath environment from the perspective of indoor localization. In this regard, two different harmonic RFID tags are designed and utilized in the study. The first one is completely planar without ground plane, where the background objects are significantly influencing the tag response. In order to mitigate the influence of background objects, a second tag with ground plane is designed, simulated, measured, and compared with the non-grounded tag. Furthermore, a ray tracing simulation is carried out to model the channel effects. Lastly, a nonlinear FMCW reader simulations conducted to futurely evaluate the ranging performance of harmonic RFID tags and accordingly the intended indoor localization accuracy.