Preheat the Oven
Preheat your oven to 350°F (175°C) and line a muffin tin with cupcake liners.
Prepare the Batter
In a large mixing bowl, cream the softened butter and granulated sugar until light and fluffy. Add the eggs one at a time, beating well after each addition. Mix in the vanilla extract.
In a separate bowl, whisk together the flour, baking powder, and salt. Gradually add the dry ingredients to the wet mixture, alternating with the milk, starting and ending with the dry ingredients. Mix until just combined.
Gently fold in the diced peaches using a spatula.
Bake the Cupcakes
Scoop the batter evenly into the prepared cupcake liners, filling each about 2/3 full. Bake in the preheated oven for 18-20 minutes, or until a toothpick inserted into the center comes out clean. Let the cupcakes cool in the pan for 5 minutes before transferring them to a cooling rack to cool completely.
Prepare the Frosting
In a mixing bowl, beat the cream cheese and butter together until smooth and creamy. Gradually add the powdered sugar and vanilla extract, beating until the frosting is fluffy and smooth.
Frost the Cupcakes
Once the cupcakes are completely cool, spread or pipe the cream cheese frosting onto each cupcake. Garnish with a fresh peach slice or a sprinkle of cinnamon if desired.