Your question really deals with that of all blessed objects. Holy water is a sacramental of the Catholic Church.
Holy water should be treated like any other blessed sacramental object that is at our disposal!
As Catholics, we are accustomed to having religious objects “blessed,” which signifies the permanent sanctification and dedication of an object for some sacred purpose. I think every weekend someone asks me as well as the other priests to bless a rosary, a statue, or some other religious object. Once a religious object is blessed and dedicated for divine worship or veneration, it must be treated with reverence and must not be used in either an improper or profane way (cf. Code of Canon Law, #1171).
What happens when the rosary or statue breaks and is irreparable? Or, when the palm dries out, and the following Palm Sunday provides us with new palm? The basic rule for the disposition of these items is to burn or to bury them.
- Fr. Joseph Edattu, VC
Personally, I have some holy water in my home and in my car at all times. I am sure that many priests do this also, as it is never known as to when one might have a need for it. I even know of one priest that carries holy water on his person in a holy water sprinkler the size of a pen!