Grease a 9×13 pan and place the tater tots in a single layer. Sprinkle 1 cup of cheese evenly over the tots.
Chop the bacon into 1" pieces. Cook bacon pieces over medium heat in a 10-inch skillet until crisp, then transfer to a paper towel-lined plate. Leave 2 tablespoons of bacon fat in the skillet.
Sauté onions in the skillet until softened, then add bell peppers and combine. Layer the onion and bell pepper mixture over the tater tots, followed by ⅔ of the cooked bacon.
Whisk eggs, milk, garlic powder, salt, and pepper in a bowl. Pour over the tater tots. Cover the pan tightly with foil and refrigerate overnight.
Preheat the oven to 350°F. Bake the covered casserole for 40 minutes.
Remove the foil, top the casserole with the remaining cheese and bacon, and increase the oven temperature to 425°F. Bake for an additional 15-20 minutes or until set and cheese is browned. Rest 5 minutes before serving.
