Preheat oven to 350°F. Line baking sheets with parchment paper.
In a large bowl, use a hand-held mixer to beat the butter, cream cheese, and granulated sugar until smooth and creamy.
Mix in egg and vanilla until fully combined.
Add the flour, baking powder, and ½ cup of confectioners' sugar (save the remaining ½ cup for rolling). With the mixer on low, slowly blend the dry ingredients into the wet mixture until just combined.
Fold in M&M's.
Using a 2-tablespoon cookie scoop, portion out the dough and roll each ball in the reserved confectioners' sugar.
Place about 6 dough balls on each lined baking sheet. Bake for 13-16 minutes (start checking around 11 minutes ), or until the tops no longer look wet.
If desired, press a few extra Easter M&M's into the top of each cookie right after baking for an extra festive touch!
Let the cookies cool on the baking sheets for 5 minutes before transferring them to a wire rack to cool completely.