Beat the softened butter and granulated sugar together in a large bowl using an electric mixer on medium speed for 3-4 minutes until pale yellow and fluffy.
Add the egg, vanilla extract, and almond extract (if using) to the butter-sugar mixture. Beat on medium speed until fully incorporated and smooth, about 1 minute. Scrape down the sides of the bowl to ensure even mixing.
In a separate bowl, whisk together the flour, baking powder, and salt to evenly distribute the leavening agents.
Gradually add the dry ingredients to the wet ingredients, mixing on low speed until just combined. Be careful not to overmix.
Form the dough into a disc, wrap in plastic wrap, and refrigerate for at least 2 hours or overnight.
Preheat your oven to 350°F (175°C) and line baking sheets with parchment paper.
On a lightly floured surface, roll out the chilled dough to about ¼-inch thickness. Cut into desired shapes with cookie cutters.
Place cookies on the prepared baking sheets about 2 inches apart. Bake for 8-10 minutes, or until the edges are just beginning to turn golden.
Allow cookies to cool on the baking sheet for 5 minutes before transferring to a wire rack to cool completely.
For the frosting, mix powdered sugar, milk, and vanilla extract until smooth. Adjust consistency with more milk or sugar as needed. Divide into separate bowls and add food coloring if desired.
Once cookies are completely cool, decorate with frosting and festive sprinkles.