Mix Dry Ingredients: In a large mixing bowl, whisk together the flour, sugar, baking powder, and salt until well combined.

Combine Wet Ingredients: In a separate bowl, mix the milk, melted butter, and egg until smooth.

Combine Mixtures: Gradually add the wet mixture to the dry ingredients, stirring until just combined. Do not overmix; a few lumps are okay.

Chill the Dough: Cover the dough and refrigerate for at least 30 minutes to relax the gluten, making it easier to work with.

Shape the Donuts: Roll out the chilled dough on a floured surface to about 1/2-inch thickness. Use a donut cutter or two circular cookie cutters (one larger and one smaller) to cut out donut shapes.

Preheat the Air Fryer: Preheat your air fryer to 350°F (175°C) for about 3 minutes.

Cook the Donuts: Place the donut shapes in the air fryer basket in a single layer, ensuring they do not touch. Cook for 5-7 minutes, flipping halfway through, until they are golden brown.

Cool and Decorate: Remove the donuts from the air fryer and let them cool slightly on a wire rack or paper towel-lined plate. Decorate with your favorite toppings, such as glaze, powdered sugar, sprinkles, or chocolate.