The Internal Revenue Service says that an ROTC scholarship used to pay for tuition, fees, books, equipment and supplies for school is not taxable (This is also assuming the IRS views the beneficiary as a student attending college, of course). However, there is a choice when getting your ROTC scholarship to use it for either tuition/school fees, OR pick "room and board". If you use ROTC scholarship money for room and board living expenses, (example, you picked the room and board choice vs tuition choice for the ROTC scholarship) you may have to include that amount in your gross income. At the time of this posting, the US Army ROTC room and board choice for ROTC scholarship money was a fixed amount of $10000 a year. Note when this is paid, however, especially in the first year of college, as you may not actually get half the money until the following tax year...and also be careful for the same reason in your last year of school. Money is taxable in the year it is received, which may not coorespond to the school year.
There is a separate ROTC subsistence stipend from the military, and a book allowance. The IRS says these payments are tax-exempt and need not be reported on the student's tax return.
There may also be summer activity as part of the ROTC program (separate from scholarship money, separate from stipend money) that results in military pay. This would be taxable.
Remember also that 1098-T forms from a school, potentially 1099-Q forms if a 529 is also involved in college payments are reported on the STUDENT's return, as they are the beneficiary...you will see they have the student's name and tax ID on them....
If a 529 is also involved, getting an ROTC scholarship can (if you fill out the forms correctly) eliminate the 10% penalty if money from the 529 is withdrawn, but also covered by a scholarship...in that case, you may only have to pay taxes on the capital gain portion of the 529. Watch the forms carefully on this one. For the 2021 Turbotax program, the section on allowable educational expenses as it related to 529 spending did not initially specifically mention room and board...I had to dig a bit deeper into the program to find the right spot.
2021 Turbotax did also not specifically call out an ROTC scholarship where the beneficiary set the Room and board option vs the tuition option for the scholarship payments, forcing that income to be self reported.
As always however, the authoratative source for tax information is not this forum or a 3rd party article, it is the IRS itself, especially since tax law can change between the time of a posting and present day.
Armed Forces Tax Guide (at the time of this posting, this was the URL for the 2021 tax guide)
https://www.irs.gov/pub/irs-pdf/p3.pdf
Tax Benefits for Education
https://www.irs.gov/pub/irs-pdf/p970.pdf
Topic No. 421 Scholarships, Fellowship Grants, and Other Grants
https://www.irs.gov/taxtopics/tc421
