"One person died of gunshot wounds," said Alex Ochieng, administrator at Jaramogi Oginga Odinga Teaching and Referral Hospital in Kisumu, an opposition stronghold on Lake Victoria in western Kenya.
"We have two other people with gunshot wounds and four who were hit by blunt objects," he told reporters, adding that the fatality was a man.
Footage aired on the privately owned television channel KTN News showed motorists scrambling to turn around on a tear-gas drenched street in the port city of Mombasa, as protesters fled on foot.
More tear-gas was fired in the capital Nairobi, the private Daily Nation newspaper reported, as police sought to break up protesters who had barricaded sections of two roads.
Police arrested 17 protesters in the capital Nairobi, said a coalition of human rights groups including Article 19. Another 11 activists were arrested in other towns, the groups said.
"We witnessed protesters being dragged on the ground," the group of 10 watchdogs said in a statement, calling for an investigation into police conduct during the protests.
There was no immediate comment by the police on the reports.
Opposition leader Raila Odinga called for the protests to oppose tax increases that were imposed despite a court-ordered suspension, and came at a time when many people were already struggling with persistently high prices of basic commodities such as maize flour.
At the rally, Odinga announced plans to collect 10 million signatures in a bid to remove his arch-rival, President William Ruto, from office.
Police had allowed the opposition's main rally to go ahead, but warned against the destruction of properties and businesses. Shops and businesses were still open in Nairobi's main central business district.
Ruto's government says the tax hikes, expected to raise an extra 200 billion shillings ($1.42 billion) a year, were needed to help deal with growing debt repayments, and fund job-creating initiatives.
The High Court suspended the implementation of the finance law last week but the government raised retail prices of petrol anyway, forcing the opposition senator who lodged the case to seek the jailing of the head of the energy sector regulator for contempt.
The court will rule on the contempt application on Monday and give further directions on the main suit on the same day.
National police spokeswoman Resila Onyango did not respond immediately when Reuters sought further comment.
Information for this report came from Reuters and AFP.