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

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

Gradually add granulated sugar, mix until fluffy, then add vanilla extract and crack in the egg. Mix until combined.

In a separate bowl, whisk together all-purpose flour, baking powder, and salt. Gradually add to the wet ingredients, mixing until just incorporated.

Scoop out portions of dough, roll into 1-inch balls, and place them on the prepared baking sheets, leaving space between each.

Gently flatten each cookie dough ball to create a small disc shape.

Bake for 10-12 minutes, watching for golden brown edges with soft centers.

Cool cookies on the baking sheets for 5 minutes before transferring to a wire rack to cool completely.

Sift powdered sugar over cooled cookies just before serving.