Gather all ingredients. Preheat the oven to 350 degrees F (180 degrees C). Line 24 muffin cups with liners.

To make the carrot cake cupcakes: Stir flour, sugar, baking powder, cinnamon, nutmeg, and salt together in a large bowl until well combined.

Add oil, eggs, and vanilla; mix well. Add carrots; mix until well blended.

Spoon batter into the prepared muffin cups, filling each 2/3 full.

Bake in the preheated oven until a toothpick inserted into a cupcake comes out clean, about 20 minutes. Cool cupcakes briefly in the pans on a wire rack. Remove cupcakes from the pans; cool completely.

To make the lemon frosting: Beat cream cheese, butter, and lemon extract together in a large bowl with an electric mixer until light and fluffy.

Gradually beat in confectioners’ sugar until smooth. If frosting is too thick to spread, gradually beat in milk.

Frost cooled cupcakes with frosting.