iPhone says not enough storage to update?
Three ways to get it installed.

Does updating iPhone take up storage? How much it needs

Apple does not publish a number. Its guidance is only that you need enough storage space on your device to download an update. You do not need to buy more iCloud storage: an update uses the iPhone's own storage, not iCloud.

1. Let iOS remove apps temporarily

During a wireless update, a message may ask to temporarily remove apps because the update needs more space. Tap Continue: iOS removes the apps, installs the update, then reinstalls them automatically. If you tap Cancel, you free the space yourself.

2. How to free up space on iPhone for the update

1. Open Settings › General › iPhone Storage and look at the Recommendations section. Tap Enable to turn one on, or tap a recommendation to review what it would delete.
2. Scroll to the list of apps, tap one you rarely open, then tap Offload App. The app goes; its documents and data stay.
3. Remove videos you downloaded for offline viewing in the TV app and other streaming apps.
4. Delete or compress your longest videos, then empty Recently Deleted in Photos.
5. Open Settings › General › Software Update and tap Download and Install.

iPhone says not enough storage but there is?

The update you already downloaded is itself in the list in iPhone Storage. Delete it and download it again.

1. Open Settings › General › iPhone Storage.
2. Find the update in the list of apps.
3. Tap the update, then tap Delete Update.
4. Open Settings › General › Software Update and download it again.

3. Update through a Mac or PC

This is Apple's alternative when there is not enough room: the computer downloads the update instead of the iPhone. Back up first.

1. On a Mac with macOS Catalina or later, open the Finder. On a PC, open the Apple Devices app, or iTunes if you don't have it.
2. Connect your iPhone with a cable and trust the computer if asked.
3. Select your iPhone: in the Finder sidebar on a Mac, or in the sidebar of the Apple Devices app.
4. Click General, then click Check for Update. In iTunes, the button is under Summary.
5. Click Download and Update and follow the steps. Enter your passcode when asked.

What about System Data?

Apple's advice is to leave it alone: if you see Other or System Data in the storage graph, you don't need to take any action. Delete apps and content you don't need, and follow the recommendations.