In a large bowl, whisk together flour, baking powder and salt.
In a second large bowl, beat butter and sugar until smooth, about 2 minutes. Beat in egg and vanilla. On low speed, beat in flour mixture until just combined.
Gather dough; divide in half. Form each half into a disk. Wrap tightly in plastic wrap. Refrigerate 4 hours or as long as overnight.
Heat oven to 350°F. Roll out one dough disk to 3/16- to 1/4-inch thickness. Cut into stars using a 2-inch star cookie cutter. Place on ungreased baking sheets; sprinkle with decorating sugar, and bake at 350°F for 10 to 12 minutes until light golden around edges. Remove from baking sheets; cool on wire rack. Repeat with remaining half of dough. Gather scraps and refrigerate. Re-roll and cut into stars. Bake as directed. When completely cool, store in airtight containers for up to 2 weeks.