Drinking recycled water is common in many places in the USA.
The EPA says, "Recycled water can satisfy most water demands, as long as it is adequately treated to ensure water quality appropriate for the use."
A common example of water recycling occurs when cities draw their water supplies from rivers, such as the Colorado River and the Mississippi River, that receive wastewater discharges upstream from those cities. Water from these rivers has been reused, treated, and piped into the water supply a number of times before the last downstream user withdraws the water.
Although most water recycling projects have been developed to meet nonpotable water demands, a number of projects use recycled water indirectly for potable purposes. These projects include recharging ground water aquifers (
as the Sweetwater plant in Tucson does) and augmenting surface water reservoirs with recycled water. In ground water recharge projects, recycled water can be spread or injected into ground water aquifers to augment ground water supplies. For example, since 1976, the Water Factory 21 Direct Injection Project, located in Orange County, California, has been injecting recycled water into the aquifer augmenting the potable ground water supply.
While numerous successful ground water recharge projects have been operated for many years, planned augmentation of surface water reservoirs has been less common. However, there are some existing projects and others in the planning stages. For example, since 1978, the upper Occoquan Sewage Authority has been discharging recycled water into a stream above Occoquan Reservoir, a potable water supply source for Fairfax County, Virginia. In San Diego, California, the Indirect Potable Reuse Reservoir Augmentation Project is currently being studied. If deemed technically feasible and approved by the City Council and Mayor, this project would augment the San Vicente Reservoir with 12,000 acre-feet per year of recycled water treated at a new Advanced Water Treatment Plant.
Reference:
https://www3.epa.gov/region9/water/recycling/