Preheat oven to 400° F. Line baking sheets with parchment paper and set aside.
In a medium bowl, whisk together the flour, baking powder, and salt. Set aside.
In a large bowl of a stand mixer (or using a hand mixer), combine butter and confectioners' sugar until light and fluffy, about 2 minutes. Add the egg and vanilla, and beat until thoroughly incorporated, about 30 seconds. Scrape down sides of the bowl as necessary.
With mixer on low, slowly add flour mixture to the bowl. The dough is ready when most of it sticks to the paddle. When touched, it has a little give, but does not stick to fingers.
Flour the work surface and roll dough to about ¼-inch thick, using flour for dusting as necessary. Use snowflake cookie cutters to cut cookies and place on prepared baking sheet.¹ Gather scraps and reroll dough when necessary.
Bake for 7 to 8 minutes or until the edges are set. Allow cookies to cool on baking sheet for 5 minutes, then transfer to wire rack to cool completely.
Royal Icing:
Place the meringue powder and water in a large mixing bowl, and whip with the whisk attachment until foamy, about 3 minutes.
Add the powdered sugar and whip on medium speed until very stiff and thick, about 3 minutes. The royal icing should hold a stiff peak. If necessary, thin with additional water, a drop at a time, to get the desired consistency.
Transfer icing to an icing bag fitted with a small round tip (I used Wilton #2). Ice the cookies and decorate with sprinkles if desired.
Notes
Cookie cutters: If using different cookie cutter shapes, place cookies of similar size on the same baking sheet as they will bake at the same rate.Meringue powder can be found at your local baking store or you can buy it online.Make ahead: Dough may be kept covered in the refrigerator for up to 48 hours. Let it sit at room temperature until soft enough to roll out, about 10 minutes.Store iced sugar cookies in an airtight container at room temperature for up to a week.Freeze dough for up to 3 months. Defrost in refrigerator before bringing to room temperature and rooling.