A system and method of forming entropy coding groups in an entropy encoder operating in a transform mode includes receiving a block of a first number of quantized transform coefficients as a current block of sample values and evaluating the current block of sample values using one or more grouping factors. In response to a determination that the current block meets a first grouping condition, a first grouping method is selected where the first grouping method forms a first entropy coding group with one sample value of a DC transform coefficient. In response to a determination that the current block meets a second grouping condition, a second grouping method is selected where the second grouping method forms a first entropy coding group with at least two sample values, one of the sample values being the DC transform coefficient.