Is there a way to limit output of Tags related to an entry?
A limit doesn't make sense on a single element model. But all ElementCriteriaModels have a limit parameter and for craft.tags it is documented here.

To limit the tags related to an entry via a Tags field don't use the shortcut syntax:

{% set tags = entry.tagsFieldHandle %}


But modify the craft.tags ElementCriteriaModel instead:

{% set tags = craft.tags({
    relatedTo: { sourceElement: entry, field: "tagsFieldHandle" },
    order:     "sortOrder",
    limit:     null
}) %}