Gather all your ingredients and let the cream cheese and butter sit at room temperature until softened.

In a mixing bowl, beat the softened cream cheese and butter together until creamy and well combined.

Gradually add the powdered sugar to the cream cheese mixture while mixing on low speed.

Add the vanilla extract once sugar is fully mixed in.

If the icing is too thick, add a tablespoon of milk at a time until the desired consistency is reached.

Taste the icing and adjust sweetness or flavor if necessary.

Frost the cooled carrot cake with the icing using a spatula.

Let the frosted cake chill in the refrigerator for about 30 minutes before serving.