To make the frosting, using an electric stand mixer fitted with a whisk attachment, beat butter on medium speed until creamy. Add cream cheese, caramel and vanilla; beat until fully incorporated. Gradually increase mixer speed to high and continue beating until light and fluffy, scraping down the sides of bowl as necessary with rubber spatula.
Gradually add confectioners’ sugar, beating on low speed, until well combined. Beat on high speed until well combined and smooth while scraping down sides of bowl as necessary, about 2 minutes.
Fill piping bag with frosting and frost the tops of the cooled cupcakes. Drizzle iced cupcakes with remaining caramel.
Serve immediately or store in an airtight container in the refrigerator. Bring to room temperature before serving.