Preheat oven to 350 degrees. Spray with cooking spray or line a cupcake tin with wrappers.
Combine all cake ingredients and beat for two minutes, or until lightened in color. Fill cupcake tins about 2/3 full and bake for twenty minutes, or until tops are golden brown.
While the cupcakes are baking, whip butter until fluffy. Add the 1 tsp tequila, lime juice, and food coloring and beat to combine. Slowly add the powdered sugar until well combined and whipped.
When cupcakes are cool, brush the tops with extra tequila and sprinkle with colored sprinkles of choice. Frost with the lime frosting. Enjoy!