In a small pot bring water, sugar and chai tea bags to a boil. Cook, stirring frequently for 10-12 minutes until sugar is dissolved and liquid has started to reduce. Remove tea bags halfway through cooking to avoid them breaking apart. Remove from heat and cool completely.
Preheat oven to 350F and line an 8x8 baking pan with parchment paper.
Heat a small pan over medium heat, toast chopped hazelnuts until aromatic about 3-5 minutes.
Cream butter, icing sugar and cooled chai tea simple syrup together with a mixer at medium speed until light and fluffy, about 2 minutes. Lightly mix in flour and toasted hazelnuts.
Add ½ cup of chopped hazelnuts (reserving the rest for sprinkling at the end), and mix with hands until dough begins to clump together.
Pour dough into prepared pan, it will be loose and crumbly, don't worry! Using your hands, pack it down. Bake for 30-35 minutes or until fully cooked. Remove from oven and allow to cool about 10 minutes, carefully remove from pan to a wire rack and allow to cool completely, about an hour.
Meanwhile, make the glaze; whisk icing sugar with chai tea simple syrup.
Once shortbread bars are cool, remove from baking pan, drizzle with chai tea glaze and sprinkle with remaining hazelnuts. Cut into 16 equal squares.
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