The hadith says that 'Isa (pbuh) will abolish the Jizya?
:wasalamex
Yup.
What Jizya does it mean? I was under the impression that the Jizya was supposed to be part of the Shariah?
It is, the Prophetic guidance is also a part of the Shari'a [Islamic law] right? Therefore, since Allaah says in the Qur'an (translation of the meaning);
By the Star when it goes down,-
Your Companion is neither astray nor being misled.
Nor does he say (aught) of (his own) Desire.
It is no less than inspiration sent down to him:
[Qur'an Al Najm (the Star) 53: 1-4]
Then the hadith (Prophetic narration) which we just stated above;
"He will.. abolish the jizya and call the people to Islam..."
Then clarifies that Jesus (peace be upon him) will abolish the Jizyah, since the Prophetic sayings are also revelation - therefore a source of law.
We also know that Islaam (submission to Allaah) has always been the religion of the Prophets, since Allaah says in the Qur'an (translation of the meaning):
Truly, the religion with Allah is Islam. Those who were given the Scripture (Jews and Christians) did not differ except, out of mutual jealousy, after knowledge had come to them. And whoever disbelieves in the Ayat (proofs, evidences, verses, signs, revelations, etc.) of Allah, then surely, Allah is Swift in calling to account.
[Qur'an 3: 19]
None of the Prophets boasted on the fact that they were Jewish by blood or followers of Christ, rather - they all focused on submitting to Allaah Alone. This was their whole way of life.
Since Jesus is the main difference between the Jews, Christians and Muslims - when he returns, then the Jizya won't be applicable anyway. Since Jesus is a sign from Allaah;
We made her (Mary) and her son (Jesus) a sign for the worlds.
[Qur'an Al Anbiya (the Prophets) 21: 91]
Since he is the main point where the majority of mankind differ, then he will come and clear the doubts of the people, that he truly is the Messenger of Allaah (to clear the doubts of the Jews who reject him) and he will clarify that he is the servant of Allaah (to clear the doubts of the Christians who raise him to the level of God.) And to confirm that he truelly is the Messiah.
If anyone rejects him after the truth has become clear and manifest, then should they really live after they have rejected him? One of the reasons why the Jews and Christians are protected under an Islamic state is because they have belief in some of Allaah's Messengers', so they have some similarities.
Yet once the clear proof has come to them - Jesus himself! Then there will be no other option, accept him or reject him. If you reject him, you will be in the party of the Anti-Christ, and without a doubt, there will only be two parties then - the party of the true believers, and the party of those who disbelieve. Those who disbelieve will fight against those who believe, since it is a battle of truth versus falsehood, these are the end times - near the final hour before the Day of Judgement.
Without a doubt, the truth is superior, and falsehood will perish. And without a doubt, Jesus is the truth - he is the servant and Messenger of Allaah. So the party of the truthful will win, and Allaah will give them victory over those who disbelieve.
"Allah has promised to those of you who believe, and do good deeds, that He will surely grant them in the land inheritance of power as He granted it to those before them; that He will establish in authority their religion which He has chosen for them. And that He will change their state after fear to one of security and peace. They will worship Me alone and not associate aught with Me." (Qur'an Al-Noor (the Light) 24:55)
Why would he abolish that?
I must be confused. What else is new. *sigh*
Insha Allaah (God willing) the above has explained it well.

And Allaah knows best.