Since 2023 there is a new setting terminal.integrated.tabStopWidth to set the tab stop size separately from the indentation size.

This is particularly useful for editing legacy code which relies on 8-space tabs but uses fewer spaces for indentation.

Here's an example configuration for a 4-space indentation, while aligning actual TABs on 8 spaces:

  "editor.insertSpaces": true,   "editor.tabSize": 4,   "terminal.integrated.tabStopWidth": 8, 

Since 2023 there is a new setting editor.indentSize to set the indentation size separately from tab stop size.

This is particularly useful for editing legacy code which relies on 8-space tabs but uses fewer spaces for indentation.

Here's an example configuration for a 4-space indentation, while aligning actual TABs on 8 spaces:

 "editor.insertSpaces": true, "editor.indentSize": 4, "editor.tabSize": 8,