In a mixing bowl, whisk together the flour, 1/4 cup granulated sugar, baking powder, baking soda, salt, and 1/2 teaspoon of ground cinnamon until well combined.
In another bowl, whisk together the milk, egg, and melted butter until smooth.
Gradually add the wet ingredients to the dry ingredients, stirring gently until just combined. The dough will be thick but slightly sticky.
Heat vegetable oil in a deep pot or fryer to 350°F (175°C).
Using a small spoon or cookie scoop, drop small balls of dough (about 1 inch in diameter) into the hot oil, being cautious not to overcrowd the pot.
Fry the donut holes for about 2-3 minutes, turning them occasionally, until they are golden brown and cooked through. Use a slotted spoon to transfer them to a paper towel-lined plate to drain.
In a small bowl, combine the coating sugar and remaining cinnamon. While the donut holes are still warm, roll them in the cinnamon sugar mixture until evenly coated.
Allow the cinnamon sugar donut holes to cool slightly before serving. Enjoy them warm!