Preheat the oven to 325°F and prepare a cupcake pan with liners.
Place the softened butter and sugar in the bowl of a mixer and beat together until creamed, about 4-5 minutes. While the butter is mixing (if using a stand mixer), sift the flour, baking powder, and salt together into a separate mixing bowl.
Once the butter and sugar have become light and fluffy, add the egg, milk, coconut extract, and tequila and continue mixing. Zest the lime and then juice it. Measure 1 tbsp lime juice and lime zest and add to the butter mixture and combine. Save the rest of the juice and zest for the frosting.
Add the flour mixture to the butter mixture, 1/3 at a time, and mix in by hand using a spatula or spoon until just mixed in. Do not overmix or your cupcakes will be dense.
Scoop the batter into the prepared liners and bake for 22-24 minutes or until a toothpick comes out clean. Allow the cupcakes to cool in the pan for 5 minutes before transferring to a cooling rack. Once the cupcakes have fully cooled, frost, garnish, and enjoy!