The question assumes there are degrees of holiness. Is that true? When we consult the OT, we see degrees of holiness in the tabernacle. The courtyard and all its equipment were holy, the “holy place” was more holy than the surrounding tabernacle, and the holy of holies was the most holy of all.
Are there degrees of holiness in people ? When we are saved we are made holy (1 Cor. 1:2). This holiness is real, but it is limited. It has not been integrated into every facet of our thoughts and behavior. Thus, it is often the case that new believers who are holy, act unwittingly in unholy ways. The Corinthians are a classic example (1 Cor. 1:2; 3:1-3). The more our minds are transformed to think as God thinks, the more holy our lives become (cf. 2 Cor. 7:1). Holy living flows from holy thinking that is motivated by love for God.
About five year ago I read A Life God Rewards by Bruce Wilkinson. It revolutionized my thinking on the topic of rewards. I found things to disagree with, but I would heartily recommend (most of) this book to all for prayerful, scriptural examination.
To answer the question posed to me, I did a quick examination of the New Testament’s teaching about rewards. Here’s what I found. Jesus taught that God rewards those who
- love those who do not love them (Mat. 5:46-48),
- do what is right without seeking to be noticed by men (Mat. 6:1),
- give to the poor without public acclaim (Mat. 6:3-4),
- pray in private (Mat. 6:6),
- fast without calling attention to their fasting (Mat. 6:16-18),
- receive a prophet or a righteous man (Mat. 10:41),
- or give even a cup of cold water to a child (Mat. 10:42; Mark 9:41).
Jesus also teaches that those who make profitable use of the capacities God has given them will be rewarded. The parables of the talents and minas (Matt. 5:14-30; Luke 19:11-27) are interesting because the master rewards faithful servants with administrative responsibility—“I will put you in charge of many things” (Matt. 25:21); “you are to be in authority over ten cities” (Luke 19:17).
I infer from these passages that the rewards of Heaven are not primarily, if at all, monetary. Jesus rewards faithful servants by increasing their responsibility and breadth of service. Eternity is not about sitting on clouds, strumming harps, nor it is simply an endless praise service. Earthly work is preparation for eternal service for our King on a much grander scale. Work in Heaven?! Don’t be disheartened! You can be confident that our Designer will so fit our heavenly service to our design that we find it incomparably enjoyable and satisfying.
When we examine Paul's writings, he teaches that God rewards believers according to their works:” We must all appear before the judgment seat of Christ so that each one may be recompensed for his deeds in the body, according to what he has done, whether good or bad” (2 Cor. 5:10; cf. Rom. 14:10). The word “bad” in 2 Cor. 5:10 does not mean sinful. It means worthless or unprofitable. God will test the produce of our entire life by fire in order to reveal its quality (1 Cor. 3:13). Those whose works survive the fire of Divine scrutiny will receive reward (1 Cor. 3:14). Those who works are burned up, will “suffer loss”; however, they will be saved (1 Cor. 3:15).
Paul commands Timothy to teach that those who do good, are rich in good works, generous, and ready to share, store up for themselves “the treasure of a good foundation for the future” (1 Tim. 6:18-19). The reward of a “crown” appears several places in the NT. All those who have loved Jesus’ appearing, will receive a “crown of righteousness” when he appears (2 Tim. 4:8). Those who persevere under trial (Jam. 1:12) and those who are faithful unto death will receive the crown of life (Rev. 2:10). Elders who shepherd the flock well will receive an unfading crown of glory (1 Pet. 5:1-4). Jesus warns the Philadelphians to "hold fast what you have, so that no one will take your crown" (Rev. 3:11).
My favorite passage on rewards is Ephesians 6:5-8. “Whatever good thing each one does, this he will receive back from the Lord, whether slave or free.” In other words, everything you and I do as to the Lord, even if it’s slave-labor, will be rewarded in Heaven! (See also Col. 3:22-24.)
The NT concludes with Jesus promising marvelous rewards to him who overcomes. The one who overcomes will:
- eat of the tree of life which is in the Paradise of God (Rev. 2:7).
- not be hurt by the second death (Rev. 2:11).
- receive some of the hidden manna, a white stone, and a new name written on the stone which no one knows but he who receives it. (Rev. 2:17).
- receive authority over the nations, rule them with Christ, and receive the morning star (Rev. 2:26-28).
- be clothed in white garments; his name will not be erased from the book of life, and Jesus will confess his name before His Father and His angels (Rev. 3:5).
- be a pillar in the temple of God, he will not go out from it anymore; and I [Jesus] will write on him the name of My God, and the name of the city of My God, the new Jerusalem, which comes down out of heaven from My God, and My new name (Rev. 3:12).
- sit down with Me [Jesus] on My throne, as I also overcame and sat down with My Father on His throne (Rev. 3:21)
- inherit the new heaven and new earth, the new Jerusalem, and the spring of the water of life (Rev. 21:1-7).
So in answer to the original question: When we understand that holiness involves not only the absence of that which is sinful, but also the presence of that which is godly, then, yes, degrees of holiness here affect the level of our reward in the next life. The more our lives are filled with the fruit of holiness, the greater our rewards will be.