How to update my iPhone 7 from iOS 15.8.2 to iOS 16 when iOS 17 is already out?

An iPhone 6s, iPhone 6s Plus, iPhone 7, iPhone 7 Plus, or iPhone SE 1 isn't capable of 16 or above; they require an A11 or better CPU.

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This iPhone cannot update further then iOS 15.8.2 due to hardware limitations, that iPhone is too old to update any further. If you need to run a newer iOS version, you'll need to buy a newer iPhone