Tipping, or baksheesh, is a way of life in Egypt. Everyone who performs some kind of service for you will expect some kind of monetary reward. This has become so engrained into Egyptian society that small children may come up and simply ask for money. Adults may engage you in conversation and then ask for a little baksheesh as you part company. Another ploy is to offer you a free gift, a small piece of alabaster or a scarab, then ask for a monetary "gift" in return. The amounts are small—£E1 is sufficient for restroom attendants, £E2 or £E3 is sufficient for most other small services—but it is up to you whether you feel obliged to hand over cash for such "services." Lots of households live very close to the poverty line in Egypt, and the dollar you hand over will have far more spending power in Luxor than in Los Angeles.
A 12% service charge is included in almost all restaurant bills. When in doubt, ask. Even then it's still expected that you will tip an extra 5% to 10% in cash (especially if you are using a credit card) if the service was to your liking. In hotels, it's customary to leave at least a dollar per day for the hotel maid. Taxi drivers don't expect a tip for short journeys around town, but you should tip if you engage a driver to take you to several attractions with waiting time, or book a driver for a day (add 10% to the agreed fee). Hotel porters expect at least $1.