Preheat and Prepare: Preheat your oven to 350°F (175°C). Line a cupcake tin with 12 cupcake liners.
Mix Dry Ingredients: In a medium bowl, whisk together the flour, baking powder, baking soda, and salt.
Cream Butter and Sugar: In a large bowl, use an electric mixer to cream the softened butter and sugar until light and fluffy. Add the eggs one at a time, beating well after each addition, then mix in the vanilla extract.
Combine Wet and Dry Mixtures: Gradually add the dry mixture to the butter mixture, alternating with buttermilk. Begin and end with the dry ingredients.
Add Peach Preserves: Gently fold in the peach preserves until evenly distributed.
Fill the Liners: Divide the batter evenly among the cupcake liners, filling each about 2/3 full.
Bake: Bake for 18–22 minutes or until a toothpick inserted into the center comes out clean. Let the cupcakes cool in the pan for 5 minutes, then transfer them to a wire rack to cool completely.
Make Frosting: Beat the cream cheese, powdered sugar, and milk until smooth. Adjust the consistency with more milk if needed.
Decorate: Spread or pipe the frosting onto the cooled cupcakes. Top with diced fresh peaches, drizzle honey over each cupcake, and sprinkle with sugar crystals.