Cream the Butter, Cream Cheese & Sugar:
In a large mixing bowl, beat the butter, cream cheese, and sugar together until light and fluffy (about 2–3 minutes). Add the egg and vanilla extract, mixing until well combined.

Mix the Dry Ingredients:
In a separate bowl, whisk together the flour, baking powder, and salt. Gradually add the dry ingredients to the wet mixture, mixing just until the dough comes together.

Chill the Dough:
Wrap the dough in plastic wrap and refrigerate for at least 1 hour (or up to overnight). This helps the cookies keep their shape when baking.

Roll & Cut the Cookies:
Preheat your oven to 350°F (175°C) and line baking sheets with parchment paper. Lightly flour a clean surface and roll out the chilled dough to about ¼-inch thickness. Use cookie cutters to cut out shapes and carefully transfer them to the prepared baking sheets.

Bake the Cookies:
Bake for 10–12 minutes, or until the edges are lightly golden. Let the cookies cool on the baking sheet for 5 minutes before transferring them to a wire rack to cool completely.

Decorate & Enjoy!
Dust with powdered sugar, sprinkle with festive toppings, or frost with royal icing for a fun and colorful finish!