Begin by preparing the yeast mixture in the bowl of a stand mixer fitted with the dough hook attachment. Combine the lukewarm milk, 1 tsp of granulated sugar, and yeast, stirring gently. Allow this mixture to rest for 10 minutes until it becomes foamy. If no foam forms, the milk might have been too hot or the yeast too old; restart with new ingredients.

Next, add the remaining sugar, salt, egg, melted butter, and 2 cups of flour to the yeast mixture. Mix on low speed until everything is incorporated. Gradually add the remaining cup of flour while the mixer runs, continuing until the dough no longer clings to the sides of the bowl. Increase the mixer speed to medium-low and knead the dough for about 5 minutes until it is smooth and elastic.

Transfer the dough to a greased bowl, covering it with plastic wrap. Allow it to rise in a warm spot until it has doubled in size. You can check if the dough is ready by pressing a finger into it; if the indentation stays, it’s ready.

Once risen, place the dough on a floured surface and gently punch it down. Roll the dough out to about 1/2 inch thickness. Use a 3-inch round cutter to cut out 10-12 donuts and a 1-inch cutter to remove the centers.

Move the donuts and holes to parchment paper dusted lightly with flour. Cover them loosely with greased plastic wrap and let them rise until they have doubled in size, which should take around 30 minutes. Meanwhile, preheat your air fryer to 350°F.

Lightly spray the air fryer basket with oil spray and carefully place the donuts inside in a single layer. Spray the tops of the donuts with oil spray as well. Cook at 350°F for approximately 4 minutes, or until they are golden brown. Repeat this process for the remaining donuts and holes.

As the donuts cook, prepare the glaze. Melt the butter in a small saucepan over medium heat. Once melted, stir in the powdered sugar and vanilla extract until smooth. Remove from heat and add hot water, one tablespoon at a time, until the glaze reaches a slightly thin but not watery consistency.

When the donuts are done, use two forks to dip each one, along with the donut holes, into the glaze, fully submerging them. Place the glazed donuts on a wire rack set over a rimmed baking sheet to catch any excess glaze. Allow the glaze to harden, which should take about 10 minutes, before serving!