This study aimed to investigate the effect of retained earnings on debt decisions of the Egyptian listed companies under the provisions of the Egyptian income tax law No. 91 of 2005, in an attempt to understanding the tax effects of the Egyptian tax law on the financing options for these companies, especially in the light of the scarcity of the previous studies that have been subjected to study of this effect on the Egyptian environment. In order to test the hypotheses, the researcher relied on a sample of 94 listed non-financial Egyptian companies, with 470 firm-year observations, between 2015 and 2019. After controlling the effects of firm size, asset structure (guaranties), non-debt tax shields, liquidity, and growth opportunities on the debt ratio, the researcher found, by using a multiple linear regression analysis, a positive relationship between retained earnings and the firm’s debt ratio. This result represents a clear empirical support for the researcher's expectations that the tax treatment stipulated in the Egyptian income tax law No. 91 for the deduction of the debit interest, it will refute from the predictions of the pecking order theory about the use of a hierarchy in finance by companies.