In a large bowl or the bowl of a stand mixer fitted with the paddle attachment, cream together the softened butter and granulated sugar on medium speed until light and fluffy, about 3-5 minutes. Scrape down the sides of the bowl.

Beat in the eggs one at a time, mixing well after each addition. Stir in the vanilla extract.

Add the sour cream and mix until just combined. Scrape down the sides of the bowl again.

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

Gradually add the dry ingredients to the wet ingredients, mixing on low speed until just combined. Be careful not to overmix; overmixing can lead to tough cookies. The dough will be soft.

Divide the dough in half. Flatten each half into a disk, wrap tightly in plastic wrap, and refrigerate for at least 1 hour, or up to 24 hours. Chilling the dough is crucial for easier handling and to prevent the cookies from spreading too much during baking.

Preheat your oven to 375°F (190°C). Line two baking sheets with parchment paper.

On a lightly floured surface, roll out one disk of chilled dough to about 1/4 inch thickness. Use your favorite cookie cutters to cut out desired shapes. Dip cutters in flour as needed to prevent sticking.

Carefully transfer the cut-out cookies to the prepared baking sheets, leaving about 1-2 inches between them. Gather dough scraps, gently re-roll, and cut additional cookies until all dough is used for this disk.

Bake for 8-10 minutes, or until the edges are lightly golden and the centers are set. The cookies should still be soft. Baking time may vary depending on the size and thickness of your cookies.

Let cookies cool on the baking sheets for 5 minutes before carefully transferring them to a wire rack to cool completely. Repeat the rolling and baking process with the second disk of dough.

In a large bowl or the bowl of a stand mixer fitted with the paddle attachment, beat the softened cream cheese and softened butter together on medium speed until smooth and creamy, about 2-3 minutes. Ensure there are no lumps.

Gradually add the sifted powdered sugar, 1 cup at a time, mixing on low speed until incorporated. Once all sugar is added, increase speed to medium and beat until smooth and fluffy. Scrape down the sides of the bowl as needed.

Beat in the vanilla extract. If the frosting is too thick for your preference, add heavy cream or milk, 1 tablespoon at a time, until the desired spreading consistency is reached. Be careful not to overmix, or the frosting may become too thin.

Once the cookies are completely cool, spread or pipe the cream cheese frosting generously over each cookie. Ensure cookies are fully cooled before frosting to prevent the frosting from melting.

Optionally, decorate with festive sprinkles or other garnishes.

Serve immediately or store for later enjoyment.