Tap water is fine, depending on the safety of your local water source.  Consider checking your local water reports before using it to prepare your baby's formula.  You may want to consult a doctor regarding the need to boil tap water prior to use, although this is unnecessary in most scenarios.  Bottled water is a fabulous option because it's already purified.  However, make sure to use a brand without fluoride.  Many infant nursery waters on the market contain added fluoride which is unnecessary until age six months when teeth begin to erupt (source).   Excessive fluoride ingestion can cause teeth staining.