An important thing to realize here is that this was effectively a holiday to celebrate Andrew Jackson, the commander of the US forces at the Battle of New Orleans. Andrew Jackson is also remembered by history as effectively the co-founder of the Democratic Party. So this was essentially a politically partisan holiday.
The Civil war effectively marked the eclipse of the Democratic Party in the United States for a while. Their base in the new Party System was now in the southern slave-holding states, and those states were no longer participating in the government. There were still some Northern Democrats, but they were split and weak. The Democratic party did not manage to acquire control of either house of Congress again for 15 years.
So it makes sense that the Republican party would use this as an opportunity to get rid of what was effectively a Democratic federal holiday.