Reference: I’laam al-Mu’aasireen bi-Fataawa Ibn ‘Uthaymeen – Page 196
Question: What should be done with [tattered and worn-out] copies of the Qur.aan after [we have finished] reading them?
Response: No doubt [tattered and worn-out] copies of the Qur.aan contain the Names of Allaah, Qur.aanic verses and ahaadeeth. Because of that, it is not permissible to degrade or abase them, but unfortunately some people [do and] use them as a table cloth for eating – this is ignorant of them. As for that which some people have of [tattered and worn-out] copies of the Qur.aan, if it is possible to burn them, then that is best. Otherwise, they can be placed in a plastic bag and tied up so as to keep them from [getting mixed up with] household rubbish.