Prepare one 2¼ inch round cookie cutter and a few 1¼ inch cookie cutters of any shape. Line two baking trays with parchment paper.
In a large bowl, cream butter and sugar until light and fluffy. Add pumpkin puree, vanilla extract, ground cinnamon, and ground nutmeg. Continue to beat until combined.
Beat in 1½ cups (225g) all-purpose flour until a soft, slightly sticky dough forms. Transfer to a lightly floured working surface.
Add remaining ¼ cup (38g) all-purpose flour and knead until dough comes together, about 1 minute. Wrap in plastic and chill for 30 minutes.
Lightly flour your work surface. Divide dough into two. Roll out dough to about ¼ inch thick. Dust round cookie cutter with flour and cut as many circles as possible. Safe the edges for reuse later.
Transfer cut out cookie dough to a tray. Place a 1¼ inch cookie cutter on top of each cookie dough. Carefully add sugar sprinkles around the 1¼ inch cookie cutter and a contrasting color sprinkles inside it. Remove the 1¼ inch cookie cutter and transfer decorated cookies onto lined baking tray.
Repeat until all dough is used up.
Bake in a 350°F (180°C) oven for 12 to 14 minutes or until edges are lightly brown. Transfer to a wire rack to cool completely before storing in airtight containers.