Preheat the oven to 350°F (176°C) and prepare a cupcake pan with liners.
In a medium bowl, mix together flour, baking powder, nutmeg, and salt. Set aside.
In a larger bowl, beat together butter, sugar, and vegetable oil until light and fluffy (about 3 minutes).
Add eggs one at a time, blending well after each addition, then mix in vanilla extract.
Add half of the dry mixture and stir until just combined. Slowly pour in eggnog, mixing well, then add the rest of the dry ingredients and mix until smooth.
Spoon batter into cupcake liners, filling each about halfway. Bake for 15 to 18 minutes, or until a toothpick comes out clean.
Cool cupcakes completely before frosting.
For the buttercream, beat butter and shortening until blended, then gradually add half the powdered sugar.
Add eggnog, rum extract (if using), nutmeg, and salt, mixing until smooth. Add remaining powdered sugar and mix until creamy.
Frost each cupcake and sprinkle with nutmeg for garnish.
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Notes
Store cupcakes in an airtight container in the refrigerator for up to 4 days. Allow to come to room temperature before serving.