Using a hand or stand mixer beat butter, cream cheese, and sugar until light and fluffy, 2-3 minutes.
½ cup unsalted butter, 3 ounces cream cheese, 1 cup granulated sugar
Mix in egg, vanilla, and almond extract.
1 large egg, 2 teaspoons vanilla extract, ½ teaspoon almond extract
In a separate bowl, whisk flour, baking powder, and salt. Add to wet ingredients in two additions, mixing until just combined. Dough will be soft but not sticky.
2 ¾ cup all-purpose flour, 1 teaspoon baking powder, ½ teaspoon salt
Divide dough in half, flatten into discs, wrap in plastic, and refrigerate at least 1 hour or up to overnight.
Preheat oven to 350° F.
Using one chilled disc at a time, on a lightly floured surface, roll dough to ¼ inch thick. Cut with cookie cutters, transferring to parchment-lined baking sheets.
Bake 8-10 minutes, until edges look set but not browned. They’ll look slightly underdone in the center that's what keeps them soft.
Let cool on the pan 5 minutes, then transfer to a wire rack. Decorate once fully cooled.