In a medium bowl or the bowl of a stand mixer, combine the warm milk and 1/4 cup granulated sugar and stir to dissolve. Sprinkle the active dry yeast over the top and let sit for 5–10 minutes, until the mixture looks foamy and bubbly. If there is no foam, discard and start again with fresh yeast and correctly warmed milk.

Add the melted, slightly cooled butter, egg, 1 teaspoon vanilla, and salt to the foamy yeast mixture. Whisk gently until combined.

Add 2 1/2 cups of all-purpose flour to the bowl. By hand, stir with a wooden spoon until a shaggy dough forms, or in a stand mixer, mix on low speed with a dough hook until the flour is mostly incorporated. If the dough is very sticky and clings heavily to your hands or the bowl, add more flour 1–2 tablespoons at a time. Aim for a soft, slightly tacky dough that doesn’t fully stick to your fingers.

Knead the dough for about 6–8 minutes. By hand, turn it onto a lightly floured surface and push, fold, and turn until smooth and elastic. With a stand mixer, knead on medium-low speed until the dough is smooth and springs back when pressed gently with a finger.

Lightly oil a large bowl with 1–2 teaspoons of neutral oil. Place the dough in the bowl, turning once to coat it in oil. Cover with a clean kitchen towel or plastic wrap and let rise in a warm, draft-free place for 1–1 1/2 hours, or until doubled in size.

Once the dough has doubled, gently punch it down to release excess air and turn it out onto a lightly floured surface. Roll the dough to about 1/2-inch thickness. Use a donut cutter (about 3 inches) or two round cutters (one large, one small) to cut out donuts and holes. Gather the scraps, gently press them together, and re-roll once more to cut additional donuts. If you don’t have a donut cutter, use a wide-mouth glass for the outer circle and a small bottle cap for the center.

Place the cut donuts and donut holes on parchment-lined baking sheets or trays, leaving space between each piece. Lightly cover with plastic wrap or a clean towel and let rise again for 30–40 minutes, until puffy.

Preheat the air fryer to 350°F (175°C) for 3–5 minutes. Some models do not require preheating, but most brown more evenly when preheated.

Lightly spray or brush the air fryer basket with cooking spray or a small amount of neutral oil to prevent sticking. Place a few donuts in a single layer in the basket without crowding. If desired, lightly mist the tops of the donuts with cooking spray to help them brown. Air fry at 350°F for 4–6 minutes, flipping halfway through, until golden brown and cooked through. Repeat with remaining donuts and donut holes, checking the holes at around 3–4 minutes as they cook faster. For your first batch, check a donut at 4 minutes by cutting it open to gauge ideal timing for your air fryer.

While the donuts cool slightly, prepare the glaze. In a medium bowl, whisk together the powdered sugar, 2 tablespoons milk, 1 teaspoon vanilla, and a pinch of salt until smooth. If the glaze is too thick, add a tiny splash more milk; if too thin, whisk in a bit more powdered sugar. The glaze should be thick but pourable and cling to the donut while dripping slowly.

Let the donuts cool for about 5 minutes so the glaze adheres well. Dip the tops of each donut into the glaze, let the excess drip back into the bowl, then place on a rack set over parchment or wax paper. While the glaze is still wet, add sprinkles, nuts, mini chocolate chips, or other toppings as desired. Enjoy warm; they are best within a few hours of air frying.

For cinnamon sugar donuts, skip the glaze. While donuts are still warm, mix 1/2 cup granulated sugar with 1 tablespoon ground cinnamon in a shallow bowl. Toss the warm donuts in the mixture until well coated.

For filled donuts, cut dough rounds without a center hole. After air frying and cooling slightly, use a piping bag fitted with a small tip to inject jam, lemon curd, Nutella, or pastry cream into the center of each donut.