Preheat your oven to 350°F (175°C) and line a baking sheet with parchment paper.

In a medium bowl, whisk together the all-purpose flour, baking powder, and salt. Set aside.

In a large mixing bowl, beat the softened butter and cream cheese together until creamy and smooth.

Gradually add the granulated sugar to the butter and cream cheese mixture, mixing until well combined.

Add in the egg, vanilla extract, lemon zest, and lemon juice, and beat until fully incorporated.

Slowly add the flour mixture to the creamy mixture, mixing until just combined.

Drop rounded tablespoons of dough onto the prepared baking sheet, spacing them about 2 inches apart.

Bake for 10-12 minutes until the edges are lightly golden and the centers remain soft.

Let the cookies cool on the baking sheet for about 5 minutes before transferring them to a wire rack.

Prepare the frosting by whisking together the powdered sugar and milk until smooth, then drizzle over cooled cookies.

Garnish with additional lemon zest if desired.