My (21M) best and only close friend (22M) has been good to me, but I can't stand his humor anymore, and the friendship is starting to go sour. What now?

I'm a very lonely person, and I have a single close friend who's stuck with me through a lot of very difficult times (we've known each other for 5 years or so, since High School), and whom I respect and appreciate for the kindness he's shown me. But lately, I've started to realize that we have very little in common, and that I often find myself having to perform when I'm talking to him.

He loves to make homophobic, sexist, and racist jokes, especially homophobic ones, for some reason. I don't like them, and yet I've been sort of forcing myself to engage and make similar jokes of my own just to fit in with him. Beyond that, I'm fairly open-minded and progressive, and when we try to seriously discuss social issues he very often falls back on the same homophobic banter, which is something I've always found frustrating about him. It can be very hard to have a serious conversation without it devolving into edgy humor.

I've tolerated this because, well, he was my only friend, and he isn't necessarily a bad person, at least in the way he actually conducts himself when dealing with other human beings, from what I've seen. But as my mental health and social anxiety have improved over the last few months, and I've managed to meet other people online, my tolerance for all of this has dropped sharply. That's started to show, and he's made remarks about me being more sensitive lately. Unfortunately, I've also noticed him escalating these behaviors and aiming the banter more pointedly at me, as if he's offended by the idea that I'm no longer fully comfortable with his humor, which, as far as I can see, is not a great way to respond. I experienced bullying many years ago at the hands of friends, and my mind recognized that pattern instantly. I'm not saying he's necessarily going to go that far; that would be a big assumption.

I don't know what to do. Even with the disrespect (disrespect that has been escalating), it's still hard to think about losing this friendship, because so far he has shown himself, through his actions toward me personally, to be a good friend. He's helped me out with many, many things. And my social anxiety today would probably be WAY worse without him. Just a couple of weeks ago he got me to start going to the gym with him, which has been really positive for me. I know there's such a thing as setting boundaries, but I have a strong feeling, based on our recent conversations, that he is not open to that kind of talk, and that bringing it up might cause him to double and triple down and frame the whole thing as a me problem.

What would be the best course of action in this situation? I feel really lost. Part of me wants to cut him off, but I'm not sure about that. And even if I wanted to, actually cutting him off would be extremely hard for me, and I wouldn't know where to start.