Preheat oven to 350°F and line an 8x8 inch baking pan with parchment paper, leaving overhang on two sides. The overhang creates handles for easy removal after baking. Grease parchment lightly with butter or spray.

Cream butter and sugars in a large bowl using an electric mixer on medium speed for 2-3 minutes until light and fluffy. Proper creaming incorporates air for tender texture. The mixture should look pale and increase in volume.

Add egg and extracts beating until fully incorporated and smooth. Scrape bowl sides with a spatula to ensure even mixing. The peppermint extract adds festive flavor without being overpowering.

Whisk dry ingredients including flour, baking powder, baking soda, and salt in a separate bowl. Whisking distributes leavening agents evenly for consistent rise. No lumps should remain after 30 seconds of whisking.

Combine wet and dry by adding flour mixture to butter mixture gradually while mixing on low speed. Mix just until combined and no dry streaks remain. Don't overmix or bars become tough and dense.

Fold in white chocolate chips using a spatula with gentle motions. Distribute chips evenly throughout dough without overworking it. The dough should be thick and slightly sticky.

Press into pan spreading dough evenly into prepared pan with your hands or a spatula. Press firmly into corners and smooth the top. The dough should be about ½ inch thick throughout.

Bake for 18-22 minutes until edges are lightly golden and center looks set but still soft. Don't overbake or bars become dry. A toothpick inserted in center should have moist crumbs, not wet batter.

Cool completely in the pan on a wire rack for at least 30 minutes before adding topping. Warm bars will melt the white chocolate immediately. Patience here ensures a beautiful finish.

Melt white chocolate in a microwave-safe bowl in 30-second intervals, stirring between each. Stir in peppermint extract if using. Spread over cooled bars, sprinkle crushed candy canes on top, and let set for 15-20 minutes before slicing.