How to update my iPhone 7 to iOS 16?

Sorry, but the built in iPhone 7 hardware does not support any further upgrades than the latest version of iOS 15.

You will need a newer iPhone, if you want to update to iOS 16

iOS 16 and iPadOS 16 are compatible with these devices - Apple Support

iPhones 6S through 7, and SE(gen. 1), will only update to iOS 15.8.3