Combat is built around a delicate balance you need to understand  

INTRODUCTION

Another post for newcomers and new GMs. Old-timers won't learn anything here, they might even point out mistakes to me in the comments (feel free to do so, I'll correct the post, as I did in another post). I'll try to give you the mindset that will help you grow as a CPR GM. Then, I hope you'll find your own answers on how to handle combat in CPR.

You need to know the rules, and with this knowledge you'll be able to understand how everything is linked together to achieve an overall balance. By understanding this, you'll realize that the combat system revolves around your players' choices (STAT, Skills, gears and tactics), with each possibility having advantages and disadvantages. Taking this last point into account will help you design more balanced and fun battles. 

KNOW THE RULES

The "Friday night firefight" chapter is one you need to know. This is the start of your journey, you need to read this chapter over and over again. Every line. You can't play with a tactical system without knowing all the rules.

JonJon the wise : Combat In Cyberpunk Red: Basic and Advanced Tactics

Cybernation Uncensored : CYBERPUNK RED Ultimate Combat Crash Course Tutorial

AND UNDERSTAND THAT EVERYTHING IS LINKED

 If you don't understand how everything is connected, you won't understand that Cyberpunk is based on choices during character creation and when spending your IP, choices about gears, and finally choices about tactics.

Factors you need to take into account :

PC/NPC

Weapons

Armor

Ammunitions

Negative modifiers

Positive modifiers

Cyberware effects

Price of the gears

I know... that's a lot of factors (I certainly missed some minor one). Remember that they are interdependent to achieve balance and diversity. By consequences every gears has been designed to balance these factors.

Here a list about how it is balanced. Each time you gain something you will also lose something elsewhere.

Concealable or not, that's a huge point because there are a lot of place where you can't carry a weapon. Corporate and Executive threat rating are patrolled by cops or security service like Lazarus Security. They will come at you if you carry a weapon. Keep in mind that :"Note that while the majority of a region might fit into a specific Threat Rating that doesn't mean a region may not have other Threat Ratings in and around the main classification". So if you carry your AR in a Moderate section of the city and get near a Corpo building... you might bring unwanted attention from Corpo police, and they don't follow the law.

2 handed weapons are super effective and most of them works under Shoulder arms (shotgun, AR and Sniper Rifle), Melee weapon or Heavy weapon. But they are weak to Critical injuries (Crushed fingers, Dismembered hand, Broken arm, Dismembered arm) and most of the time not concealable.

1 Handed weapons can be dual wielded without any malus and offer versatility ( you can grab someone with one hand, then equipped as a human shield and you can still fire your 1 handed weapon at another opponent) . You can switch them freely via pop-up weapon. They are also quite easy to conceal from the start or with a pop-up weapon. You can lose an arm and still fight ! But they are short-range and do less damage than Shoulder arms weapons. (Dual wielding advantages)

Close combat (Martial arts, Melee weapon, and even Brawling) is more effective than ranged combat (except explosives), it's a balance choice as it doesn't make any sense IRL. The idea is to give players more choices and more fun (subjective). But they need to reach close range and will be weak against Suppressive fire, not useful during a car chase, and will ask you to take bigger risks in general as it's difficult to take cover while fighting at close range.

Martial arts does 4D6 ROF2 and it's always concealable BUT that's a x2 skill and you need body 11+ which means GMBL + Linear Frame (which can raise suspicion) 2000eb / 8D6 Humanity loss at character creation. The sooner or later 2 major therapy 8D6 humanity / 2000eb , minus Hustle time x2 let's say 600 for a Solo ---> 4600eb at the end of the day. And you need to fight at close range, which requires high level in Evasion + capability to dodge ranged attack + high MOVE. Still one of the best damage dealing combo of the game.

There are 2 Very Heavy weapons that are awesome : Kendachi mono three and Arasaka Reaver. On the other hand they aren't concealable unless you are using a specific linear frame : the Fūma Kotarō Linear Frame (5000eb).

An AR is the most versatile weapon in the game thanks to its 5D6 damage AND a small DV to hit from 13m to 100m (which is huge). But it's not concealable. You have two ARs that can be concealed when disassembled. And it takes time to reassemble them. Other drawback, it's a 2handed weapon.

Shotgun, handgun are not very effective at middle and long range. You might need a middle range capability or you can be fine with that. (A fixer might just want to invest in one offensive skill : Handgun, as most of them can be concealed in a way or in another). With Shoulder arms you can switch to an AR in combat. But you need to spend an action for that or to dump your previous weapon on the ground. And it's a 2handed weapon.

Hurricane shotgun does 5D6 ROF2 BUT it's an exotic weapon : standard quality, no smartlink, basic ammunition only. That's not all, it requires 10 in BODY if not mounted (GMBL + therapy), needs 2 turns to reload which is not a big issue as it comes with 16 ammo = 8 turns, and you can't aimed shot. Of course you can TechUp the Hurricane to have AP ammo or an Excellent quality (5000k). That's a 5000k 2handed weapon, one of the best in the game.

The Pop-up shotgun is a concealable weapon using Shoulder arm skill with ROF1, 5D6 damage BUT it has only 2 ammo in magazine. Remember that reloading cost 1 action. On the other hand it's a 1handed weapon.

Heavy pistol are ROF 2 but with 3D6 they will get through SP11 only half of the time. Which is fine, as you can dual wield with a Very Heavy Pistol or you wan use Spot weakness to get through the armor. Against higher armor SP, they start lacking a lot.

SMG aren't good in single fire mode (except with the fact they are easier to use at middle range than pistols BUT with less damage). Most of the time you should use them for Autofire, that's it. And Autofire means 10 bullet each time, you aren't gonna use AP/Incendiary ammo until you are really rich. On the other hand they are concealable, so you have an Autofire + concealable combo.

An Eagle survivalist crossbow doesn't cost a lot, 500eb, and give you a wide range of small DV as you combined range of AR and Crossbow under 1 skill : Archery. That's just awesome. But it's an exotic weapon and you can't buy an excellent quality one and you can't equip it with a SmartLink. Meaning it's less effective against a high evasion opponent than a good old crossbow (EQ + Smartlink). (yeah later you can Upgrade it to Excellent quality)

Explosives weapon will do a lot of damage in a large area of effect. At short range Athletics is enough for grenade, at middle range you will need Heavy Weapon (x2 skill). But it can hit innocent people, draw unwanted attention and damage stuff around you.

Heavy weapons skill is more versatile than people think, because there are plenty of weapons that don't go BOOM and which offer a lot of different special effect. But it's a x2 skill and versatility cost money as you need a lot of different exotic and standard weapons.

This list is not exhaustive at all, but you get the idea. Before making a judgment about a weapon or a tactics, you must ask yourself if their is a niche situation where it can be useful (e.g: Light Melee weapon + biotoxin). Because this is the way the game have been design. 

 If you ignore one of these factors, you upset the balance. And that can make already suboptimal (but viable) gears and tactics totally irrelevant. Which means less choices, and with less choices everybody will play the same minmaxed gears and tactics. It's gonna be a boring journey. 

THAT'S WHY IT'S ALL ABOUT CHOICES

 That's a tactical system by nature, but Cyberpunk is not a tactical RPG.

Remember how your Edgerunners should think : "Style over Substance". And even if they are more about Substance for some of them (it happens), they aren't playing a group of elite stealth operatives (like Delta force or whatever special forces) in a wargame like setting. They are roleplaying edgerunners (p.28) with qualities and flaws who blend in a specific cyberpunk setting, they are part of a crew and they wish to survive.

Some of your players choices might not be optimal in term of combat efficiency. That's a good news, as most of them are perfectly viable if you understand how to run the game. Each weapons/armors/cyberwares/combat tactics in the game are useful, some are more versatile and other are very specific. That's a good thing as it allows more variety.

Your players need to make educated choices (STAT, Skills and Gears), each one of them comes with drawbacks. 

HOW SHOULD YOU DESIGN A COMBAT ENCOUNTER

Tailored it to your group (captain obvious inside)

Don't push them towards minmax, it's fine not to have everyone able to dodge ranged attacks, it's fine not to have everyone with a Linear Frame, 60HP and high Death save. Just don't punish them. Some battles will be impossible for them, that's Cyberpunk spirit. But I hope they'll find plenty of ways to avoid unnecessary fights, and only choose fights they can win. This isn't a wargame, it's a TTRPG, and smart players can do amazing things with the right piece of Intelligence despite having low combat abilities.

Core rule book p.399 "The Battle" will give you advice in order to build encounters.

It works fine and with more experience you will be able to design better encounters in term of number and quality of the opposing force. 

But that's not an accurate science, as each group are very different even with the same characters sheet. Because it also depends a lot if your players like tactical game or not. By consequences they will not have the same level of experience and involvement into the tactical aspect of the game. That's fine, but you need to be flexible and to learn what kind of players you are trying to entertain. 

In the "Hardened lieutenant" DLC you will find a definition of Hardened character (see below), Hardened crew and Hardened mooks. They give you advice in order to use hardened mook, lieutenant and mini-boss.

What is a Hardened Character? A Player Character is considered Hardened when they meet any of the following criteria:

But that's not an accurate science, as each group are very different even with the same characters sheet. Because it also depends a lot if your players like tactical game or not. By consequences they will not have the same level of experience and involvement into the tactical aspect of the game. That's fine, but you need to be flexible and to learn what kind of players you are trying to entertain. 

And HOW CAN YOU MAKE COMBAT MORE INTERESTING

This is where you can play with your players choices.

Vary locations

These are examples, again you get the idea behind. Choose situations where thing might get difficult just because they can't use their favorite gears and tactics. 

 Vary opponents behavior

Some opponents lack tactical skills, like many gangers (except 6th street). They'll attack head-on, aggressively. That's supposed to be quit easy encounters. But you can boost difficulty via number or a lieutenant. In Danger Gal Dossier we have some very dangerous gangers (lieutenant and mini-boss).

Others, like corpo solos, will have a good base Tactics score, and will use advanced techniques and weaponry to try and stop the PCs. Play them smart. They are going to use the most optimize way to fight : cover, smoke grenade, flashbang grenade, suppressive fire, etc.... 

 Vary  Play on your PCs' weaknesses. 

 I'm not saying you should punish them all the time, that would be dumb as it's not fun at all. But it's important to raise the bar sometimes, and you don't need big guns to do that. Because when a PC wants to be good in one area, he will be lacking in another, that why choices are so important. As a GM, you can use it to your advantage to spice up battles a bit.

Evasion is so important that most PCs will not score too badly in this area. But the other 4 are rarely ALL at their best (except for Solos). And even some Solos who want to diversify a little may be lacking in one of these skills. You can play on these weaknesses from time to time by using weapons and tactics in order to target them. 

 Play on their strength 

For example, I did a whole fight where the opposing corpo guards only used Dartgun (Sleep DV13). I had a reason ingame, but the real goal was to prove to my 3 players that they made a good choice by raising Resist D&T up to 13/14. It worked, the few who missed a dodge managed to resist the Sleep ammo. Obviously the fight was an easy win, that was not tactical at all, BUT they reaped the reward of their choices.

It's a mistake to not use weapons and tactics because you know as a GM it will not work against your PCs (like a gas attack while they all have nasal filter), they spent IP/Money into better resistance. Prove them right !! 

HANDLING HIGH EVASION AND BULLET DODGING CREW

 Yeah... they are all hardened PCs, meaning it's a hardened crew. Still, they will miss an Evasion check sooner or later. And again, it's about choices. If they spent STAT, Skill and/or money (Reflex co-processor) in order to achieve base 14 in Evasion and ranged attack dodging capability, then it's fair that most combat are going to be easier for them.

Don't punish them or you will make their choices irrelevant and next time they will feel it's not a choice anymore but a mandatory thing to do. Remember that a lot of situations shouldn't end with a combat. But if they are all combat optimized, they might tend to resolve everything with violence. Sooner or later they will pay the price for it.

On the other hand, it is sometimes necessary to increase the opposition a little:

More in this topic

LETHAL OR NOT ?

 The system is a lot less lethal than CP2020 but a lot more than D&D. Your players need to understand that all combat can't be win. You must avoid some of them and sometimes you will need to retreat.

Example : you are in the middle of a fight, PCs got injuried a bit, but they have the upper hand. Everything can turn sour with one grenade on three PCs, 2 can't dodge and the solo roll a 1. You roll damage and get 1, 2, 3, 4, 6, 6 = 22 + 5 (critical injury) = 27. Then you roll dismembered hand on the group Solo who is using a shotgun (2Handed weapon). The other two are now under half their HP and got a -2 to every action. It's time to retreat ! Of course they might still have the advantage and will probably win the fight, but the risk to lose 1 PC is a lot higher now.

Combat against "mirror" team. Meaning the same numbers of opponents, almost same gears and ability to dodge bullet and slightly less effective Base score. They are going to take a lot of time. As SP11 and 40HP+ on both side will drag the fight. They are very luck based, as a bad critical injury can lower your combat ability to the point a PC can't keep up anymore against his "mirror" opponent.

At the end of the day, combat is not that lethal until a bad critical injury destroys your group tactic. At first glance because of SP11, PCs are safe. They are not if they play like a bunch of gangers while thinking they are invulnerable. 

MISTAKES TO AVOID

Playing like it is a tactical RPG: Don't think it's a tactical RPG. Yes the system is quite tactical, but the setting is not about that at all ! Your PCs need to be clever and to avoid meaningless combat when possible. (saving face is NOT meaningless in Cyberpunk)

Playing epic: Don't play an epic campaign for your first campaign. The game is supposed to be Street level (p.392). Don't pay them to much and don't distribute 5000k weapons like candies. Later in the campaign they will have cool toys. Take your time to reach that point.

Punishing a choice / a weakness. There is a difference between using a weakness against them from time to time to spice up a combat and systematic punishment. The former makes them remember their characters aren't superhero, they are just badasses. The later is just straight up bullying and will kill all the fun.

Using "big guns" as a solution. Thinking that only big guns will solve your "problem" with a very combat optimized party. Playing smart is enough most of the time. And you don't have a problem to begin with as they have weakness in other area if they spent a lot in combat abilities.

Homebrewing without any experience with the system : Invent expertise allows Tech players to propose homebrewed gears for the crew. It's also an easy way to break balance in the game and to shutdown some choices by consequences. Play the game RAW, enjoy it ! Then, with more experience, you can tweak it and even go wild.