There are a number of people who don't think it's taxable at the federal level.

Error form 1099 Misc California Middle Class Tax Refund- - Intuit Accountants Community

Im thinking that Intuit tried to program it to automatically deduct on he 540CA if you mark that it is MCTR, but its deducting it from federal....either that or Intuit knows something we dont about the federal taxability of this payment!

Why would a State Middle Class tax refund be exempt from Federal tax? Is this a Federal Program and all other 49 States didn't participate?

Some preparers are arguing that it could be federally excluded under the General Welfare Exclusion, but I havent seen anything official yet.

This was supposed to be a "gas rebate" from the state of CA for our outrageous $7+/gal gas prices last summer, but somehow once they issued it, it became a "refund".