Preheat the oven to 350°F. Line a cupcake pan with paper liners to prevent sticking.
Whisk flour, sugar, baking powder, and salt in a large bowl. Add diced butter and mix on low until it forms coarse crumbs.
Add and incorporate eggs one by one in the mix, scraping bowl sides as needed. Then mix in milk and vanilla until batter is smooth.
Fold in the rainbow sprinkles with a spatula, being careful not to overmix.
Fill the cupcake liners two-thirds with batter and bake at preheated oven for 15 minutes or until a toothpick comes out clean from the center.
After baking, let cupcakes cool in the pan for some minutes, then move to a wire rack to fully cool.
Prepare the frosting by creaming 3/4 cup butter while the cupcakes cool. Gradually add powdered sugar, milk, and vanilla extract, beating until fluffy. Once cooled, frost cupcakes with the funfetti and add extra sprinkles.