A great reply is always “wow, you must be so embarrassed you said that.” As soon as you say “that’s racist” people shut down—but say it’s embarrassing and watch them grapple with it (and then eventually straight up call it racism if it’s warranted).

Also, if someone makes a racist/sexist/homophobic/whatever joke, the best response is “I don’t get it... can you explain?” Again, if you just say “that’s racist” people shut down (and others watching may think you’re being too harsh). But pretending you don’t understand the joke means they have to explain it... and to explain a racist joke you have to say something racist and it’s easier to call that out... or they don’t explain it because they know it’s racist.