Using 2015 American Housing Survey data, this study generates the first national estimates of the use of drinking water alternatives among households who perceive their tap water to be unsafe. Multivariate regression models examine factors influencing both perception of tap water and the choice of tap alternatives. We find that minority households more commonly perceive their tap water to be unsafe and choose bottled water when they perceive the tap as unsafe. While perception of unsafe tap water is most prevalent among Hispanic households, among the population perceiving their tap to be unsafe, Black households more commonly buy bottled water. We estimate the minimum annual expenditure by all U.S. households who perceive the tap as unsafe and buy bottled water to meet necessary consumption standards at $5.65 billion annually. Novel secondary treatment interventions and education campaigns are needed to address the perception of tap water as unsafe and consequent alternative source reliance, while additional research is needed to document the active trade‐offs households make to manage their water sources, and to better understand determinants of the perception of tap water as unsafe within minority groups.