Preheat the oven to 350-degrees F. Line your muffin tins, or grease well.
Whisk together the dry ingredients in a medium bowl; set aside. In the bowl of an electric mixer fitted with a paddle attachment, beat the butter until creamy. Add in the sugar, key lime zest, and juice and beat again until fluffy. Add in the milk, egg, and egg whites and beat to combine. Scrape down the sides of the bowl.
Reduce the mixer speed to low and gently add the dry ingredients a little at a time until combined.
Divide the batter evenly between the prepared muffin tin cups. Bake for 20-22 minutes until a toothpick comes out clean. Transfer the cupcakes to a wire rack to cool completely before frosting.
In the bowl of an electric mixer, fitted with a paddle attachment, add the butter and cream cheese. Beat until smooth. Add the zest and juice from the key limes and beat to combine. Finally, add the powdered sugar into the bowl and mix gently on low until combined. Beat on high for 2 minutes.
Frost cooled key lime cupcakes by hand, or transfer the frosting to a piping bag. Store any leftover frosting in an airtight container the refrigerator for up to 10 days.