Preheat the oven to 350°F and line two large baking sheets with parchment paper.

Add softened butter and sugar to the bowl of a stand mixer fitted with a paddle attachment. Cream the butter and sugar on medium-high speed until light and fluffy, about 3 minutes.

Add vanilla and egg. Continue mixing for another 3 minutes to combine well.

Add baking powder and salt, and combine well. Then, add 1 cup of flour at a time, mixing until just combined and no flour streak remains.

Lightly flour a clean surface and roll the dough out to about 1/4 inch thick.

Cut out shapes with cookie cutters, keeping each cut as close as possible to get the most out of each cut. Transfer cut-out cookies to the prepared baking sheets. Combine the scraps of dough and reroll to cut out more dough, continuing this step until all the dough is used.

Bake for 7-9 minutes, depending on the size of the cookie cutter you use. Remove from the oven when the bottom edges start to brown lightly.

Allow cookies to cool for 1 minute on the cookie sheet and transfer to a wire rack to finish cooling.

Add powdered sugar, milk, and extract to a small bowl and mix until smooth.

If coloring, divide into separate bowls and add food colors as desired. Add to a pastry bag or squeeze bottle.

Pipe icing onto cookies and allow to air dry until set. If adding sprinkles or edible glitter, do so before setting.