The July 2025 release of Visual Studio Code (v1.103) includes two headline features:
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Chat Checkpoints let you restore your workspace and chat history to a previous point during Copilot sessions. Helpful if AI changes span multiple files and you need to undo (or redo) quickly.
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MCP (Model Context Protocol) tooling updates remove the 128-tool limit by grouping tools dynamically, add server autostart, trust prompts, and a new client credentials flow for auth.
Other highlights:
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AI task list tracking in chat
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Inline chat math rendering
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Azure DevOps remote code search
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Git worktree support
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TypeScript 5.9.2
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Notebook agent tools
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Electron 37 update
Full coverage and details here:
https://visualstudiomagazine.com/Articles/2025/08/07/VS-Code-Update-Chat-Checkpoints-and-Improved-MCP-Tooling.aspx