This paper describes the five main techniques used in a macroblock (MB) based codec to improve lossless compression on a wide variety of images. The decaying tree hypothesis is a central theme of this codec, and is a stronger form of Shapiro's zero tree hypothesis. It can be stated simply, as - "this node is zero, and so are all of its descendants in the same and next (less significant) bit plane". Lossless image coding is applied to professional grade video coding, for encoding video frames at the highest possible quality setting. Flat/skip coding of macroblocks gives very good compression for graphics, and switching between multiple arithmetic contexts.