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We’re back with the July update for the AI Toolkit for Visual Studio Code! This month marks a major release—version 0.16.0—bringing features we teased in the June prerelease into full availability, along with new enhancements across the board.

💳 GitHub Pay-as-you-go Model Support

AI Toolkit now supports GitHub pay-as-you-go models, making it easier to continue building without friction when you exceed the free tier limits.

Here’s how it works:

• When you hit the usage limit for GitHub’s hosted models, AI Toolkit will provide a clear prompt with a link to GitHub’s paid usage documentation.

• You can enable model usage billing in your GitHub Settings.

• Once enabled, you can continue using the same model in the Playground or Agent Builder—no changes needed in your workflow.

This integration helps keep your development flow uninterrupted while giving you flexibility on how and when to scale.

🤖 Agent Builder Enhancements

In last month’s June update, we introduced early access to function calling and agent version management—two highly requested features for building more reliable and dynamic AI agents. With v0.16.0, these features are now officially included in the stable release.

We’ve also made several usability improvements:

• Resizable divider between input and output panels


• Cleaner, more compact evaluation results table

Explore the latest features in the Agent Builder documentation.

🌐 Agent Development in VS Code: From Local to Cloud

Whether you’re just getting started or ready to scale, AI Toolkit now makes it seamless to go from local experiments to production-ready deployments in the cloud.

🔍 Discover and Deploy Models with Ease

You can now browse and explore a growing collection of models—including 100+ models from Azure AI Foundry—directly in the Model Catalog view. Once you’ve selected a model, you can deploy it to Azure AI Foundry with a single click, all within VS Code.

• ➡️ Learn more about the Model Catalog


• ➡️ How deployment works in Azure AI Foundry

⚙️ Iterate Locally, Scale When Ready

The Playground and Agent Builder experience is designed to help you with prototyping quickly. Start with free, hosted models on GitHub to experiment with prompts and agent behavior. As your use case grows, you might hit rate limits or token caps—when that happens, the toolkit will proactively guide you to deploy the same model to Azure AI Foundry, so you can continue testing without interruption.

🚀 Get Started and Share Your Feedback

If you haven’t tried the AI Toolkit for VS Code yet, now is a great time to get started. Install it directly from the Visual Studio Code Marketplace and begin building intelligent agents today.

We’d love to hear from you! Whether it’s a feature request, a bug report, or feedback on your experience, join the conversation and contribute directly on our GitHub repository.

Let’s build the future of AI agent development together 💡💬

• 📄 See full changelog for v0.16.0


• 🧠 AI Toolkit Documentation

Happy coding, and see you in August!