The IRS has announced that certain state tax payments, including the California Middle Class Tax Refund, aren’t taxable. (IR-2023-23, February 10, 2023.)
The nature of the payments are excludable general welfare and disaster relief payments.
The IRS has made a chart of state payments that are excluded from federal taxable income. Here’s a URL for the chart. https://www.irs.gov/newsroom/state-payments
California issued Form 1099-MISC for California Middle Class Tax Refund payments made during 2022. To create a trail for the IRS, you can report the amount reported on Form 1099-MISC on the “Other Income” line at Schedule 1, line 8.z. and then subtract the same amount with the description, “Tax exempt, IR-2023-23.”