Confidence among U.S. consumers declined more than forecast in January, reaching the lowest level in more than a year as higher payroll taxes took a bigger bite out of Americans’ paychecks.

The Conference Board’s index decreased to 58.6, the weakest since November 2011, from a revised 66.7 in December, figures from the New York-based private research group showed today. The January reading was lower than the most pessimistic forecast in a Bloomberg survey, which had a median estimate of 64.

The drop in confidence coincides with a two percentage- point increase in the payroll tax used to fund Social Security, a hurdle for consumers after a projected pickup in spending in the fourth quarter. The outlook for employment prospects and incomes also deteriorated this month, today’s data showed.

“The uncertainty and bickering is weighing it down,” Richard F. Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, said before the report. “I’m convinced that a lot of people didn’t realize that their taxes were going up in January. These higher payroll taxes, they’re going to put that much of a dent in disposable income.”

The 8.1-point slump in the gauge of sentiment from a month earlier was the biggest since August 2011. Estimates of the 73 economists surveyed by Bloomberg ranged from 59 to 70. The measure averaged 53.7 in the recession that ended in June 2009.

Stocks declined after the figures, erasing earlier gains. The Standard & Poor’s 500 Index dropped 0.1 percent to 1,499.42 at 10:04 a.m. in New York.

Home Prices

Another report today showed property values increased in November by the most since August 2006. The S&P/Case-Shiller index of home prices in 20 U.S. cities climbed 5.5 percent from November 2011, after advancing 4.2 percent in the year to October.

The Conference Board’s gauge of present conditions fell to a three-month low of 57.3 in January from 64.6. The measure of expectations for the next six months slumped to 59.5, the lowest since October 2011, from 68.1.

The share of consumers expecting more jobs to become available in the next six months dropped to 14.3 percent in January, the lowest since December 2011, from 17.9 percent the previous month.

Fewer consumers anticipate a pickup in their incomes as well. The share expecting an increase in the next six months fell to 13.6 percent, the lowest since October 2011.

Labor Market

The number of respondents who said jobs are currently plentiful declined to 8.6 percent in January from 10.8 percent. Those who said jobs are hard to get rose to 37.7 percent from 36.1 percent.

Increased pessimism about the labor market may be seeping into purchase plans. The share of Americans planning to buy a car in the next six months fell to 10.1 percent, the lowest since April 2012.