Whisk the dry ingredients. In a medium bowl, whisk the flour, baking powder, and salt. Set aside. This ensures even leavening and keeps the dough from over-developing gluten later.

Cream the butter, cream cheese, and sugar. In a large bowl, beat the butter, cream cheese, and sugar together until light and fluffy, about 2–3 minutes. Scrape the bowl. This step adds air and helps create that soft, tender crumb.

Add egg and extracts. Beat in the egg, vanilla, and almond extract (if using) until smooth. Scrape the bowl again so everything mixes evenly.

Combine wet and dry. Add the dry ingredients in two additions, mixing on low just until no streaks of flour remain. The dough should be soft but not sticky. If it’s very sticky, add 1–2 tablespoons more flour.

Chill the dough. Divide the dough into two disks, wrap in plastic, and chill for at least 1 hour (or up to 48 hours). Chilling relaxes the dough and prevents spreading.

Preheat and prep. Heat the oven to 350°F (175°C). Line baking sheets with parchment paper for easy release and clean edges.

Roll the dough. On a lightly floured surface, roll one disk at a time to about 1/4 inch thickness. Rotate the dough and dust lightly as needed to avoid sticking, but don’t over-flour.

Cut shapes. Use cookie cutters to cut out shapes. Transfer to the prepared sheets, spacing about 1 inch apart. Re-roll scraps gently; these cookies handle multiple re-rolls well.

Bake. Bake for 9–12 minutes, depending on size and thickness. Look for set edges and a pale top; only the bottoms should be lightly golden. Over-baking dries them out.

Cool. Let cookies rest on the sheet for 5 minutes, then move to a rack to cool completely before decorating.

Decorate. Finish with royal icing, a simple powdered sugar glaze, or just a dusting of sanding sugar before baking for a classic look.