The first known magnetic mineral, magnetite, has unusual properties, which have fascinated mankind for centuries; it undergoes the Verwey transition around 120 K with an abrupt change in structure and electrical conductivity. The mechanism of the Verwey transition, however, remains contentious. Here we use resonant inelastic X-ray scattering over a wide temperature range across the Verwey transition to identify and separate out the magnetic excitations derived from nominal Fe and Fe states. Comparison of the experimental results with crystal-field multiplet calculations shows that the spin-orbital dd excitons of the Fe sites arise from a tetragonal Jahn-Teller active polaronic distortion of the Fe O octahedra. These low-energy excitations, which get weakened for temperatures above 350 K but persist at least up to 550 K, are distinct from optical excitations and are best explained as magnetic polarons.