In a stand mixer, cream together butter, cream cheese, and sugar. Add egg yolk, lemon extract, and yellow icing gel.
In a separate bowl, combine flour, baking soda, baking powder, and salt. Slowly add to the mixer and mix until combined.
Using a 1.5-tablespoon cookie scoop, scoop mounds of cookie dough onto a parchment-lined baking sheet. Place in the refrigerator for 1 hour. This prevents spreading while they bake.
Preheat the oven to 375℉. Bake the cookies in the oven for 12-14 minutes until set.
Lemon Frosting
Add butter to a stand mixer with a whisk attachment. Whip the butter for 3-4 minutes, until it begins to get light in color, almost white. Slowly add powdered sugar. Add lemon extract, yellow icing gel, and 1-2 tablespoons of milk until it reaches the desired consistency.
Let the frosting chill in the fridge until ready to use.
Once the cookies are fully cooled, use a 1-tablespoon cookie scoop or spoon to add a dollop of yellow frosting to the top of each cookie.