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With Congress voting last week to extend the payroll tax holiday, 160 million workers will be spared an immediate tax hike. But the move leaves them facing an even bigger hit in January, when the holiday ends and the payroll tax joins a long list of levies already set to sharply and abruptly go up.

Dec. 31, the George W. Bush-era tax cuts are scheduled to expire, raising rates on investment income, estates and gifts, and earnings at all levels. Overnight, the marriage penalty for joint filers will spring back to life, the value of the child credit will drop from $1,000 to $500, and the rate everyone pays on the first $8,700 of wages will jump to 15 percent from 10 percent.

The Social Security payroll tax will pop back up to 6.2 percent from 4.2 percent under the deal approved Friday by Congress. And new Medicare taxes enacted as part of President Barack Obama's health care initiative will for the first time strike high-income households.

The potential shock to the nation's pocketbook is so enormous, congressional aides have dubbed it "Taxmageddon." Some economists say it could push the fragile U.S. economy back into recession, particularly if automatic cuts to federal agencies, also set for January, are permitted to take effect.

Obama and congressional Republicans say they hope to avert the coming blow, which stands to suck roughly $500 billion out of the economy in 2013. But both sides are bracing for another epic showdown in the weeks after the November election, as Democrats prepare to use the influx of tax increases to break the partisan impasse over taxes that has blocked action on an array of issues, from modernizing the nation's infrastructure to taming the national debt.

"I see the framework of a big agreement in the lame-duck congressional session to finally put this divisiveness behind us," said Rep. Richard Neal, D-Mass., a senior member of the tax-writing House Ways and Means Committee. "Obama's going to have great leverage to get something done."

Since they took control of the House last year, congressional Republicans have needed nothing from Obama. They were the holdouts, demanding big cuts in federal spending in exchange for helping Obama keep the government open and raise the legal limit on government borrowing, known as the debt ceiling.

But in December, deadlock will cut the other way. Republicans need Obama if they want to prevent one of the biggest tax increases in U.S. history - nearly $5 trillion over the next decade, by official estimates - and block deep cuts to the Pentagon that could be triggered as part of last summer's debt-ceiling accord.

The tax shock is set to occur after the Nov. 6 election but before the new Congress, and potentially a new president, take office two months later. While the outcome of the contest is likely to color the tax debate, Obama will either be freshly re-elected or on his way out and, therefore, free to play hardball with Congress.

White House officials say Obama will not sign another full extension of the Bush tax cuts, as he did in December 2010. Obama is demanding a partial extension that would preserve the cuts for middle-class taxpayers but permit rates to rise on household income over $250,000.

Many Republicans and outside analysts say they doubt Obama would make good on his veto threat. Allowing all of the Bush tax cuts to expire would harm middle-class taxpayers, along with the wealthy, and carry grave risks for the economy.

Still, Democratic spines may be stiffened by polls showing broad support for their latest tax strategy, which emphasizes higher taxes for millionaires rather than the merely well-off. A recent Washington Post-ABC News poll found that 72 percent of Americans support raising taxes on people with incomes of more than $1 million a year, in line with Obama's call for a "Buffett Rule" that would require those families to pay an effective tax rate of at least 30 percent.

Many Republicans maintain they would never raise taxes on a group the GOP views as small-business owners and "job creators." Besides, Republican strategists said, they are likely to have bargaining chips of their own in December.