Im ready to file 2017 tx returmn and it says 2016 on software,do i still use this

You cannot use 2016 software to file a 2017 tax return.  There is new software for each tax year.

I did not file 2016 tax using desktop software but online. Now how do I file 2017 without purchasing new software?

WHEN did you prepare and file a 2016 return online?

I purchased copy of delux software from costco but paid from online on Feb 16 2017. So I still have that delux software unused and I thought I could use it for 2017.

No!  You cannot use 2016 software to file a 2017 tax return.  Each year has its own software written to comply with the tax laws for that year.  You need 2017 software to prepare a 2017 tax return.

Right, so how do I file 2017 tax without purchasing new software?

You can try using the Free Edition online.  If you have a simple return that can be filed on a 1040EZ or 1040A you can file for free.  But you cannot enter any itemized deductions, foreign income, HSA, or self-employment income in that version.