I found a soft bump on the top of my cats tail what should I do, could it be a bug bite?

Answers:
Most likely, yes, it is a bite.
But - there is a chance it could be:

Wart: Yes, pet's get warts. Not painful.

Cyst: Smooth lumps beneath the skin. May grow slowly. Can discharge cheesy material and become infected. Otherwise, not painful.

Hematomas: Collections of blood beneath the skin, especially on the ears. Caused by trauma.