Preheat oven to 350°F. Cut parchment paper for the bottom of your two 8" cake pans and spray with gluten-free cooking spray.
In a large bowl cream together the softened butter and sugar together with a mixer until fluffy.
Add the vanilla, lemon extract, lemon peel, food coloring (optional), flour, salt, and baking powder to the butter mixture and mix until combined.
Add the milk and mix until smooth.
Beat in egg whites and mix on high for 2 minutes.
Bake on the middle rack for 25-30 minutes, until a toothpick inserted in the center, comes out clean and the sides of the cake is pulling away from the side of the pan.
Cool the cakes in the pans for about 10-15 minutes. Place the cakes on a cooling rack to completely cool before frosting.
To make the frosting: in a large bowl beat the softened butter at medium speed, until smooth. Add the vanilla and lemon extract and mix until fully combined. Add the powder sugar one cup at a time to the buttery spread mixture and mix until fully combined.