In the recent time, technological advancements in high temperature devices lead to demand of dielectric ceramics with stable dielectric value at high temperature. Similarly, dielectric ceramics are being utilized in numerous energy storage applications. Herein, these properties were achieved through introduction of relaxor characteristics in the sodium bismuth titanate Na0.5Bi0.5TiO3 (NBT) by rare earth Ho3+ substitution (Na0.5 Bi0.5−xHoxTiO3, where x = 0.0, 0.5, 1, 2, and 3 mol%). Enhancement of relaxor properties were found with the substitution, which had been verified from the dielectric curve, polarization–electric field (P–E) loop and strain–electric field (S–E) curve. Observed diffuse phase transition type relaxor property in the dielectric curve was broadened with the holmium substitution. The plateau type of dielectric curve of 3 mol% Ho3+ substituted NBT results in excellent stability of dielectric constant over temperature range of 120 to 500 °C and 95 to 500 °C with 5% and 15% variation, respectively. The P–E loop changed from square to slim loop with holmium substitution. The slim polarization loop led to higher recoverable energy storage density (Wrec) of 0.46 J/cm2 at ≈ 108 kV/cm and 0.68 J/cm2 at ≈ 114 kV/cm electric field at room temperature for 2 and 3 mol% of Ho3+ substitution, respectively. In addition, 3 mol% Ho3+ substituted NBT exhibited stable Wrec of 0.68 J/cm3 from room temperature to 90 °C. Thus, 3 mol% Ho3+ substituted NBT can be a promising lead free ceramic for energy storage application and thermally stable dielectric capacitor for high temperature device applications. © 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.