How do I update my iPhone 7 to iOS 16?

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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You can’t. Your iPhone is only capable of updating up to iOS 15.8.3. iOS 16 requires an iPhone 8 or later.

You will need an iPhone 8, iPhone 8 Plus or iPhone X if you want to update to iOS 16.