Property Tax Reduction Act of 2023 This bill reduces federal Medicaid funding beginning in FY2025 for certain states that require political subdivisions to contribute funds towards medical assistance. Specifically, the bill applies to states that received, for FY2023, disproportionate share hospital (DSH) allotments greater than six times the national average. (DSHs are hospitals that receive additional payment under Medicaid for treating a large share of low-income patients.) Excepted from the bill are contributions that: (1) are required from a political subdivision that has a population greater than 5 million and imposes a local income tax upon its residents, or (2) were required for administrative expenses as of January 1, 2023.