Combine the diced peaches, lemon juice, and 1/4 cup sugar in a bowl and let sit for 5 minutes to release juices. Melt 1.5 oz butter in a saucepan over medium heat and add the peach mixture, cooking for 2-3 minutes until the peaches begin to soften. Mix the cornstarch with 2 tablespoons of the peach liquid in a small bowl until smooth, then stir this slurry into the pot and cook for another 1-2 minutes until the filling thickens slightly. Remove from heat, stir in the vanilla, lemon zest, and ground nutmeg, then transfer to a bowl and refrigerate while you prepare the remaining components. I like to make this filling first so it has plenty of time to cool and the flavors can meld together.

Preheat your oven to 350°F. Spread 1/3 cup flour on a baking sheet and toast it in the oven for 5 minutes, then remove and let cool slightly—this removes the raw flour taste and adds depth to the topping. In a bowl, combine the toasted flour, 3 tablespoons brown sugar, and 1/2 teaspoon cinnamon, then work in the cold cubed butter with your fingers or a fork until the mixture resembles coarse breadcrumbs. Set the streusel aside at room temperature until ready to use.

Line a muffin tin with cupcake liners (this recipe yields about 12 cupcakes). Gather all your dry ingredients and combine the 1 cup sugar, 6.5 oz cake flour, 1/2 tablespoon baking powder, 1/2 teaspoon salt, and 1.5 teaspoons cinnamon in a medium bowl—this dry mixture will be added to your wet ingredients. Keep the 2 fl oz oil, 2 oz melted butter, 1 large egg, 1.5 teaspoons vanilla, 4 oz sour cream, and 3 fl oz milk nearby and at room temperature for the batter.

In a large bowl, combine the oil and melted butter, then add the egg and vanilla and whisk until well combined. Alternate adding the dry ingredient mixture from Step 3 and the combined sour cream and milk, starting and ending with dry ingredients—mix just until the batter comes together without overmixing, as this keeps cupcakes tender. Divide the batter evenly among the lined muffin cups, filling each about two-thirds full. Spoon approximately 1 tablespoon of the chilled peach filling from Step 1 onto the center of each cupcake, then sprinkle a small amount of streusel from Step 2 on top. Bake for 20-22 minutes until a toothpick inserted into the cake portion (not the filling) comes out clean and the tops are golden.

Let the baked cupcakes rest in the muffin tin for 10 minutes, then transfer them to a wire rack to cool completely to room temperature. This resting time allows the cupcakes to set properly and makes them easier to remove from the liners without breaking. While the cupcakes cool, you can prepare the frosting.

Beat 9 oz room-temperature cream cheese and 4 oz softened butter together for about 1 minute until light and creamy, scraping down the bowl as needed. Gradually add the sifted 17 oz powdered sugar, 2 teaspoons vanilla, and 1/4 teaspoon salt, mixing until smooth—avoid overmixing as this can incorporate air bubbles. Pour in the 4 tablespoons heavy cream and beat for another minute until the frosting reaches a spreadable consistency. I find that adding the cream at the end gives me more control over the frosting's texture, allowing me to adjust the consistency if needed.

Once the cupcakes are completely cool, pipe or spread a generous dollop of cream cheese frosting from Step 6 on top of each cupcake. Top each frosted cupcake with a sprinkle of remaining streusel from Step 2 and garnish with a few diced peach pieces for a beautiful presentation. Serve immediately or store in an airtight container in the refrigerator for up to 3 days.